June 22 (Bloomberg) -- Kenya’s shilling rebounded from a 17-year low after Reuters cited the country’s central bank governor Njuguna Ndung’u as saying the regulator is ready to take “appropriate and corrective” action to curb speculation.
The shilling gained as much as 2.2 percent to 89.58 per the dollar and was trading 0.2 percent stronger at 91.40 by 3:35 p.m. in Nairobi, the capital. Yesterday, the currency of East Africa’s biggest economy closed at 91.58, the weakest level since March 1994, when the nation abolished exchange controls and allowed the currency to trade freely.
The European debt crisis, expectations of low domestic food supplies, and speculation by currency traders are weakening the currency, Ndung’u said, according to Reuters, without specifying which actions the bank will take.
“The comments from the central bank governor urging caution against speculation contributed to the strengthening,” Solomon Alubala, a trader at Co-operative Bank of Kenya, said by phone from the capital Nairobi today. “In the past the central bank has taken a hands-off approach, as the shilling has been losing, and now they are signalling they are ready to take action.”
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