Tuesday, August 9, 2011

Kenyan shilling extends 7-day fall to new record low



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The Kenyan shilling extended falls for a seventh day to a new record low of 94.11 against the dollar on Tuesday, weighed down by energy and food importers' demand for the greenback
The Kenyan shilling extended falls for a seventh day to a new record low of 94.11 against the dollar on Tuesday, weighed down by energy and food importers' demand for the greenback 

Posted  Tuesday, August 9  2011 at  12:26
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NAIROBI, Tuesday
The Kenyan shilling extended falls for a seventh day to a new record low of 94.11 against the dollar on Tuesday, weighed down by energy and food importers' demand for the greenback as and a continuing global selloff of emerging and frontier assets.
Traders said the shilling could weaken further in coming days, though a move by the central bank to reduce the amount of foreign currency banks are allowed to hold could offer some support, as could dollar inflows from the tourism sector.
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At 0722 GMT, commercial banks quoted the shilling at 94.00/20 against the dollar, weaker than Monday's close at 93.40/60.
"The shilling could continue weakening in the days to come undermined by world economic factors, the energy sector and the current food crisis," said Bank of Africa in its daily report to its clients.
"However, some reprieve could come from the inflows from the tourism sectors and also policy measures being undertaken by authorities like reducing the amount of exposure banks can hold on the trading book."
The tourism sector is expected to increase dollar receipts during the east African nation's peak visitor season that starts this month.
The shilling has lost 16.8 percent against the dollar this year, battered by strong dollar demand, falling appetite for riskier currencies and market doubts over the central bank's monetary policy direction.
"Investors want to move to (safe) havens so high-risk assets like the Kenyan shilling, South African rand and the Ugandan shilling are suffering," Sameer Lagadia, head of trading at Diamond Trust Bank, said.

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