Kenya’s shilling, the world’s worst- performing currency this year, depreciated to a record low as importer demand for dollars increased. The currency of East Africa’s biggest economy slumped 0.6 percent to 104.20 per dollar by 11:59 a.m. in Nairobi, after earlier slipping 0.8 percent to 104.43, the weakest on record, according to International Monetary Fund data. It closed at 103.60 yesterday. “There is high demand in a thin market and we are seeing very little in terms of inflows,” Duncan Kinuthia, head of trading at Commercial Bank of Africa Ltd., said in a phone interview from Nairobi today. “Most of the demand is from telecommunication companies.” The shilling has fallen 23 percent so far this year as inflation accelerated to 17.3 percent last month, more than triple the government’s 5 percent target. Kenya’s central bank last week raised its benchmark interest rate by four percentage points to a record 11 percent to bolster the currency. The shilling may weaken further in the coming two to three weeks, possibly as low as 110 per dollar “on momentum alone,” said Aly-Khan Satchu, head of Rich Management, a Nairobi-based investment company. “There is some kind of Africa risk aversion going on” amid the European debt crisis, Satchu said by phone. “We have a very illiquid and nervous market where no one is prepared to take any risk.” Central Bank of Kenya Governor Njuguna Ndung’u addressed lawmakers today to explain the factors behind the weakness of the shilling and the decline in the country’s foreign-exchange reserves, Chris Okemo, chairman of the parliamentary finance committee, told reporters in Nairobi. The panel will release a statement on the discussions later today, he said. To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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