Kenya’s shilling appreciated for the first day in three on low dollar demand following an increase in the benchmark interest rate.
The currency of East Africa’s biggest economy gained as much as 0.4 percent to 89.50 per dollar before trading 0.3 percent higher at 89.55 at 11:20 a.m. in Nairobi, according to data compiled by Bloomberg.
The Kenyan central bank raised the rate by 1.5 percentage points to 18 percent on Dec. 1 to contain inflation after prices rose more than double a government target. The worst regional drought in 60 years and higher fuel prices helped spur inflation to 19.7 percent in November from 18.9 percent in the previous month, the National Bureau of Statistics said last month.
“The shilling has strengthened on account of low dollar demand and a prevailing tight liquidity following the increase in the benchmark rate by the central bank,” Duncan Kinuthia, a dealer at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview today.
The Tanzanian shilling weakened 0.7 percent to trade at 1,676.15 to the dollar while Uganda’s currency gained for a sixth day, rising 0.8 percent to 2,503 per dollar
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