Kenya’s shilling, the world’s best-performing currency against the dollar this month, headed for the longest winning streak in more than seven months as tightened money supply pushed banks to sell dollars.
The currency of East Africa’s biggest economy gained for a sixth day, the longest streak since March 31, rising 0.2 percent to 93.43 per dollar by 3:44 p.m. in Nairobi, according to data compiled by Bloomberg.
Kenya’s monetary policy committee increased the key lending rate by 5.5 percentage points to a record 16.5 percent on Nov. 1 as it battles to contain inflation spurred by the worst regional drought in 60 years and higher fuel prices. Inflation accelerated to 18.9 percent in October from 17.3 percent in the previous month.
“The shilling is riding on the back of prevailing tight money-supply regime due to the tightening of monetary policy,” Jeremiah Kendagor, acting head of trading at Nairobi-based Kenya Commercial Bank Ltd., said in a phone interview. The shilling is expected to strengthen to 92 in the coming days, Kendagor said.
The Tanzanian shilling weakened on increase dollar demand from oil importers and manufacturing companies, losing as much as 0.6 percent to 1,765 per dollar before trading at 1,757 at 3:47 p.m. in Dar es Salaam, the commercial capital.
“Demand for dollars is coming in from the oil marketing companies and manufacturers,” Alex Ngarusa, head of treasury at CRDB Bank Plc, said by phone today from Dar es Salaam.
Uganda’s currency appreciated for the second day, adding as much as 1 percent to 2,575.25 per dollar before trading 0.4 percent up at 2,590.45 at 3:49 p.m. in Kampala.
“We saw a bit of selling down of the dollar in the interbank market and dollar inflows to the non-governmental sector,” Faisal Bukenya, the head of currency trading at Barclays Bank Uganda Ltd., said by phone from Kampala.