Kenya’s shilling advanced for a third day, its longest winning streak in five weeks, as businesses sold dollars after the central bank lowered its benchmark interest rate for a third time this year to boost the economy.
The currency of East Africa’s largest economy appreciated as much as 0.2 percent to 85.25 per dollar, and traded less than 0.1 percent stronger at 85.32 by 11:05 a.m. in Nairobi, the longest stretch of gains since Oct. 3, according to data compiled by Bloomberg.
The central bank’s Monetary Policy Committee, led by Governor Njuguna Ndung’u, lowered the benchmark interest rate by 2 percentage points to 11 percent, the bank said in an e-mailed statement yesterday. The economy grew 3.3 percent between April and June, the slowest pace in 10 quarters, as record interest rates stifled lending and Europe’s debt crisis undermined tea and flower exports.
“Some players in the market had bought dollars ahead of the decision, expecting a larger than 200 basis points rate cut, prompting them to cut their dollar positions,” Nairobi-based NIC Bank Ltd. said in a note to clients. The bank expects the shilling to trade within a range of 85 to 85.50 a dollar today, it said in the note.
“The market is reviewing its long dollar position which is giving support to the shilling,” Duncan Kinuthia, head of trading at Commercial Bank of Africa Ltd., said by phone.
Uganda’s shilling weakened for the fourth day, depreciating 0.3 percent to 2,592.50 a dollar, while the Tanzanian shilling traded unchanged at 1,591 a dollar.
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