Kenya’s Shilling Falls for 4th Day on Interest Rate Speculation
Kenya’s shilling fell for a fourth day, headed for the lowest close in a week, on speculation slowing inflation will enable the central bank to cut interest rates, reducing the currency’s yield advantage.
The currency of East Africa’s biggest economy declined 0.2 percent to 82.90 per dollar by 2:54 p.m. in Nairobi, the capital. A close at that level will be the weakest since Feb. 22, according to data compiled by Bloomberg.
Kenyan inflation slowed for the third straight month in February, giving the central bank a reason to lower its key lending rate from a record high. The inflation rate declined to 16.7 percent this month from 18.3 percent in January, the Kenya National Bureau of Statistics said in an e-mailed statement today.
“We maintain our view that the Monetary Policy Committee will reduce the Central Bank rate by 100 bps at its meeting on 6 March,” Phumelele Mbiyo, a Nairobi-based analyst at Standard Bank Group Ltd., wrote in e-mailed comments. The bank “would seek to strike a balance between stimulating economic activity and protecting the shilling.”
Kenya’s government has asked the central bank to prevent the shilling from further appreciating because it’s reducing revenue for exporters, Reuters reported yesterday. The shilling shouldn’t be allowed to gain beyond 82 per dollar, acting Finance Minister Njeru Githae was reported as saying.
Tanzania’s shilling appreciated 0.6 percent at 1,591 per dollar, while Uganda’s shilling declined 0.6 percent to 2,379 per dollar, the weakest level on a closing basis since Jan. 23.
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