Kenya’s shilling depreciated to the weakest level in more than eight months against the dollar as oil rallied to a 30-month high and businesses sought to buy dollars to meet month-end obligations.
The currency of East Africa’s biggest economy slumped as much as 1 percent to 82.59 per dollar, the weakest intraday level since June 7, and traded 0.2 percent lower or 82 at 12:37 p.m. in Nairobi.
Brent oil futures rose as much as 7.7 percent to $119.79 a barrel on the London-based ICE Futures Europe exchange, the highest since Aug. 21, 2008, as Libya’s violent uprising reduced supplies from Africa’s third-biggest producer. Loyalists of Libyan leader Muammar Qaddafi sought to crush dissent in the capital of Tripoli as his opponents tightened control of eastern cities and President Barack Obama condemned the regime’s attacks.
“The shilling has weakened due to high demand for dollars by businesses to settle their month-end invoices and with the political crisis in the Arab world, the surge in oil prices will pile more pressure on the local unit in the coming days,” Steve Lagat, a dealer at Nairobi-based CFC Stanbic Bank Ltd., said in a phone interview today. The shilling may “breach the psychological 83 shillings to the dollar level as global oil prices surge,” Lagat said.