Kenyan energy demand hurts its currency

Nairobi, Kenya — ESI-AFRICA.COM — 06 May 2011 – The Kenyan shilling fell against the American dollar yesterday, undermined by greenback demand from the energy sector, along with jitters about a strike threat over pay and a fuel crisis that left pumps dry in the capital.

On the Nairobi Stock Exchange, the main NSE-20 share index was edged down 0.38 points to close at 4,031.78, while the All Share Index rose 0.39 points to end at 95.31.

At the close of trade, commercial banks quoted the shilling at 83.80/90 to the dollar, down from the previous day’s close of 83.55/65.

“We saw some heavy demand from the oil sector and corporate sector,” said Sameer Lagadia, head of trading at Diamond Trust Bank. “If the demand continues, we will see a weaker shilling.”

In early trade, the shilling was also under strain over the prospects of a strike in east Africa’s biggest economy and the ongoing fuel crisis.

The head of Kenya’s Central Organisation of Trade Unions, Francis Atwoli, said he would call a strike in 21 days unless the government raised minimum wages by 60%, instead of a promised 12.5%, fuelling a wave of negative sentiment among investors.

“There’s nothing positive coming out of the market at the moment “’ fuel crisis, Atwoli threatening to go on strike, so nothing is really working,” said a senior treasury manager at Citibank.