Johnstone Ole Turana
Oct. 6 (Bloomberg) -- Kenya’s shilling strengthened for the second day against the dollar after the central bank raised its benchmark interest rate to curb inflation AND stem the currency’s decline to the weakest on record.
The currency of East Africa’s biggest economy appreciated 0.5 percent to 100.85 per dollar by 11:29 a.m. in Nairobi.
The Central Bank of Kenya yesterday increased its rate by a record 4 percentage points to 11 percent, signalling a policy shift in a bid to combat inflation of 17.3 percent, more than triple the government’s target.
“The decision by central bank to raise its rate has positively supported the shilling,” Duncan Kinuthia a trader at Nairobi-based Commercial Bank of Africa Ltd., said by phone.
The shilling has depreciated 20 percent this year, making it the world’s worst performer against the dollar. It reached a record-low 104.2 on Sept. 27 as the worst regional drought in 60 years boosted food prices.
--Editors: Ana Monteiro, Peter Branton
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