Kenya’s shilling, the world’s best performer against the dollar this month, appreciated for the third day as demand for the U.S. currency was subdued while businesses settle local tax obligations.
The currency of East Africa’s biggest economy strengthened 0.5 percent to 91.98 at 1 p.m. in Nairobi, set for the fourth weekly gain, according to data compiled by Bloomberg.
Kenya’s businesses are due to pay value-added tax, withholding tax, aviation fees and excise duty by Nov. 20, according to Kenya Revenue Authority website.
“The shilling has gained against the dollar on low demand as businesses settle their tax bills,” Jeremiah Kendagor, acting head of trading at Nairobi-based Kenya Commercial Bank Ltd., said by phone.
The country’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 Tanzanian shilling strengthened for the fourth day as lenders offloaded dollars to the market, appreciating 0.3 percent to 1,720.
“The banks are supplying dollars to the market, leading to the appreciation of the shilling,” Hakim Sheik, a dealer with Commercial Bank of Africa Tanzania Ltd. said by phone from Dar es Salaam, the commercial Capital.
Uganda’s currency gained for a third day, strengthening 2 percent to 2,520, set for a second weekly gain.
“The shilling has gained on low dollar demand due to tight money supply which have seen interbank borrowing rate at 30 percent,” Dickson Musoni, a currency trader at Kenya Commercial Bank’s Ugandan unit said by phone from Kampala.