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Kenyan Shilling Snaps Two-Day Gain on Energy Industry Demand

17 Apr 2012

Kenya’s shilling weakened against the dollar, snapping two days of gains, on continued demand for the U.S. currency from the energy industry.

The currency of East Africa’s biggest economy traded 0.1 percent lower at 83.15 per dollar by 11:53 a.m. in Nairobi.

“There have been pockets of demand especially from the energy sector, which I would attribute to the normal monthly cycle,” Rafael Owino, assistant general manager for Treasury at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview today.

Kenya, which imports all the oil it consumes, introduced retail controls in December 2010 under which prices are set every month. The review on April 15 raised pump prices of the mostly commonly used grade, so-called super petrol, by 6.81 shillings to 118.50 shillings ($1.43) a liter, the Energy Regulatory Commission said April 14.

Energy prices account for 18.3 percent of the inflation weighting, the second highest after food at 36.03 percent, according to data from the Kenya National Bureau of Statistics.

Oil traded near the highest close in two days in New York after a bigger-than-projected gain in U.S. retail sales countered concern that rising crude prices will curb economic growth.

Uganda’s currency declined 0.2 percent to 2,505 per dollar, while Tanzania’s shilling also depreciated 0.2 percent, reaching 1,590 per dollar.