Kenyan Shilling Gains Second Day Before Central Bank Meeting
Kenya’s shilling advanced for a second day, its longest winning streak in more than three weeks, as investors awaited the outcome of today’s central bank monetary policy committee meeting.
The currency of East Africa’s largest economy appreciated as much as 0.2 percent to 85.40 per dollar and was less than 0.1 percent stronger at 85.50 a dollar by 10:01 a.m. in Nairobi, poised for the longest stretch of gains since Oct. 15, according to data compiled by Bloomberg.
The Central Bank of Kenya, led by Governor Njuguna Ndung’u, may lower its benchmark interest rate for a third consecutive meeting as inflation at a two-year low widens the room for policies to stimulate growth. The bank will probably reduce its benchmark interest rate by 2 percentage points to 11 percent, according to the median estimate of six economists surveyed by Bloomberg News. The bank is expected to publish its decision via e-mail after 3 p.m. in the capital.
“The markets are very quiet as we await the decision of the monetary policy committee later in the day,” Jeremiah Kendagor, head of trading at Nairobi-based Kenya Commercial Bank Ltd., said by phone. Anything like a 300 basis points cut will have a significant impact in the market, he said.
Inflation slowed for the 11th consecutive month in October, declining to 4.1 percent from 5.3 percent in September, the Kenya National Bureau of Statistics said on Oct 31. The economy expanded 3.3 percent in the second quarter, the slowest pace since the final three months of 2009, as tea and flower exports slumped and tourism declined, eroding foreign-exchange income from the country’s two biggest sources.
“Central Bank policy makers are widely expected to cut interest rates to boost lending and spur the economy,” Nairobi- based NIC Bank Ltd. said in a note to clients. NIC expects the shilling to oscillate between 85.30 a dollar and 85.80 for the day, it said.
The Tanzanian shilling gained less than 0.1 percent to 1,592 a dollar, while Uganda’s shilling strengthened less than 0.1 percent to 2,582 a dollar.
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