Bloomberg News

Kenyan Shilling Weakens, Snapping Gain as Inflation Edges Higher

August 01, 2011

Aug. 1 (Bloomberg) -- Kenya’s shilling weakened, snapping a July 29 gain that increased demand for dollars.

The currency of East Africa’s biggest economy depreciated 0.1 percent to 91.10 per dollar at 12:04 p.m. in Nairobi, Kenya’s capital from a close of 91.00 on July 29.

“The shilling has weakened due to increased demand after it had strengthened to the 90 level,” Wilson Mutai, a dealer at Nairobi-based Africa Banking Corp., said in a phone interview. The bank expects the shilling to trade at 90.70 to 91.50 in coming days, he said.

Kenyan inflation accelerated for the ninth straight month in July, pushed by rising cost of food and fuel.

Prices climbed 15.5 percent from the year earlier, compared with 14.5 percent in June, the Kenya National Bureau of Statistics said in an e-mailed statement today. Prices rose 1.27 percent in the month.

The central bank’s Monetary Policy Committee left the benchmark interest rate unchanged at 6.25 percent at its last meeting on July 27, following two consecutive increases, saying tighter monetary policy won’t reduce supply side price pressures. Food costs are rising because of a regional drought, while higher oil prices are pushing up transport costs.

--Editors: James Kraus, Ana Monteiro

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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