Kenya Shilling Falls Versus Dollar for First Time in Three Days
Kenya’s shilling weakened on speculation monetary policy makers will keep cutting interest rates as food-price inflation slows.
The currency of East Africa’s largest economy fell less than 0.1 percent to 84.80 a dollar by 11:19 a.m. in the capital, Nairobi, heading for a 0.5 percent weekly drop, its biggest since the five days through June 1, according to data compiled by Bloomberg.
“Inflation expectations are currently heading south and we would expect the central bank rate to follow on that lower trajectory,” Raphael Agung, assistant general manager of Treasury at Commercial Bank of Africa Ltd., said by phone from Nairobi. “Food prices, which are a principal part of the basket, have been trending lower with good rains.”
Kenya’s central bank cut borrowing costs for the second consecutive meeting on Sept. 5, reducing its policy rate by a total of 500 basis points, or 5 percentage points, to 13 percent, from a record high. Inflation eased for the ninth consecutive month to 6.1 percent in August, from 7.7 percent in July. Normal to above-normal rainfall is expected in Kenya in the so-called October to December long rainy season.
Uganda’s shilling dropped 0.4 percent to 2,520 a dollar, heading for its weakest close in since Aug. 23, while Tanzania’s currency gained for the first session in five, climbing 0.1 percent to 1,575.
To contact the reporter on this story: Sarah McGregor in Nairobi at firstname.lastname@example.org
To contact the editor responsible for this story: Nasreen Seria at email@example.com