July 2 (Bloomberg) -- Kenya’s shilling strengthened for a second day as the central bank extended its policy of curbing money supply through repurchase agreements and term-auction deposits.
The currency of East Africa’s largest economy appreciated 0.2 percent to close at 84.05 per dollar, extending its gains this year to 1.2 percent, according to data compiled by Bloomberg.
The Central Bank of Kenya accepted 4.3 billion shillings ($51 million) in seven-day repurchase agreements at a weighted average rate of 17.239 percent and 1.92 billion shillings of the four-day securities at a rate of 16.239 percent, an official with the Nairobi-based bank, who asked not to be identified in line with policy, said by phone.
The bank also accepted 300 million shillings of 14-day term auction deposits at 17 percent and 5 billion shillings in 28-day deposits at 17.24 percent, according to the official. The sale today is the fourth auction after the bank stayed out for five days from June 20 through June 26, according to data compiled by Bloomberg.
Longer term auction deposits were introduced “as an additional instrument for liquidity management,” the bank said June 5.
Kenyan inflation slowed to a 15-month low in June, declining for the seventh straight month to 10.1 percent from 12.2 percent in May, the Kenya National Bureau of Statistics said in an e-mailed statement June 29. Inflation is down from a peak of nearly 20 percent in November. Kenya’s central bank monetary policy committee, which raised the benchmark interest rate to a record 18 percent last year to curb price gains and support the shilling, is set to meet on July 5, according to the bank’s website.
Tanzania’s shilling weakened for a second day, down 0.2 percent to close at 1,575 per dollar, the most since May 24. Uganda’s shilling declined 0.2 percent to close 2,475 per dollar, the lowest level since June 20.
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