Kenya’s shilling, the world’s best-performing currency this month, gained for a second day against the dollar on expectations that interest rates will remain high after the central bank’s monetary policy committee meeting.
The currency of East Africa’s biggest economy advanced 0.1 percent to 89.63 per dollar by 3:05 p.m. in Nairobi, the capital.
“After the inflation numbers came out yesterday, we can now expect central bank to increase interest rates or retain them where they are tomorrow,” Bernard Matimu, chief dealer at Nairobi-based NIC Bank Ltd., said by phone today. “Whenever inflation increases the shilling gains, there is an inverse relationship.”
The central bank may keep its benchmark interest rate unchanged tomorrow at 16.5 percent after a record boost of 9.25 percentage points in the past three months helped to reverse a slide in the shilling, according to seven of the 10 economists surveyed by Bloomberg.
Inflation accelerated to 19.72 percent in November from 18.91 percent in October as food and fuel costs increased.
Tanzania’s currency climbed 0.3 percent to 1,680 as of 2:04 p.m.
“We have seen significant inflows from especially mining companies today,” Alex Ngurusu, Head Treasurer at CRDB Bank Plc. said today by phone from Dar es Salaam, the Tanzanian commercial capital.
Uganda’s shilling strengthened for a third day, gaining 0.6 percent to 2,560 as of 3:14 p.m.
“The demand of the dollar is low in the market because of low economic activities by major buyers due to the hard economic conditions in the country,” Faisal Bukenya, the head of currency trading at Barclays Bank of Uganda Ltd., said by phone from Kampala. “We also had a Treasury bills auction today and the anticipation was that it would attract in dollars from offshore investors.”