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Kenya Shilling Gains Most This Month as Bank Curbs Money Supply

April 12 (Bloomberg) -- Kenya’s shilling strengthened the most this month, as the central bank removed money from the market for the fourth straight day through repurchase agreements.

The currency of East Africa’s biggest economy appreciated as much as 0.2 percent, the most on a closing basis since March 28, to 83.05 per dollar and traded at 83.15 as of 3:34 p.m. in Nairobi.

The Central Bank of Kenya received 10.1 billion shillings ($121 million) in bids and accepted 5 billion shilling for seven-day repurchase agreements at a weighted average rate of 15.54 percent, Godfrey Putunoi, a bank official, said by phone today from the capital.

The bank has removed a total of 24.6 billion shillings from the market since April 5, after the monetary policy committee indicated it would intervene to curb volatility.

“We will continue with the current tight monetary policy until we are sure we are out of the woods,” Finance Minister Njeru Githae told reporters yesterday.

The committee retained the central bank rate at 18 percent to ensure that inflation continues to decline toward the government target while maintaining exchange rate stability.

The inflation rate declined for a fourth month to 15.61 percent in March from 16.69 percent in the previous month, the Kenya National Bureau of Statistics said last month.

Tanzania’s shilling strengthened as much as 0.6 percent to 1,580 per dollar and was trading 0.3 percent higher at 1,585 at 3:42 p.m. The Ugandan shilling weakened for a second day, depreciating as much as 0.4 percent to 2,515 per dollar.

-- Editors: Peter Branton, Linda Shen

To contact the reporter on this story: Johnstone Ole Turana in Nairobi at jturana@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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