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Johnstone Ole Turana
Oct. 12 (Bloomberg) -- Kenya’s shilling strengthened the most in almost two weeks as the central bank offered to drain money supply through a repurchase agreement.
The currency of East Africa’s biggest economy appreciated 1.3 percent to 104.75 at 12:31 p.m. in Nairobi, the strongest intraday gain since Sept. 29.
Kenya’s central bank offered 10 billion shillings ($95 million) of seven-day repurchase agreements, according to a central bank official who declined to be identified in line with the regulator’s policy.
“The shilling has strengthened following the central bank decision to curb liquidity in the market through a 10 billion shilling repurchase agreement,” Chris Muiga a senior trader at Nairobi-based Kenya Commercial Bank Ltd., said by phone today.
The Central Bank of Kenya raised its benchmark interest rate by 4 percentage points to a record 11 percent on Oct. 5, signalling a policy shift in a bid to combat inflation and rescue the shilling.
Kenya’s parliamentary finance committee proposed long-term measures to address supply-side problems including increased domestic food production and building food reserves to reduce imports, Chris Okemo, head of the parliamentary finance committee, said yesterday in Nairobi.
The committee will meet officials from the agriculture, finance and energy ministries at a future date to discuss the measures, Okemo said.
The shilling has depreciated 23 percent this year, making it the world’s worst performer against the dollar. Inflation accelerated for the eleventh consecutive month in September to 17.3 percent from 16.7 percent in August, more than triple the government’s target.
--Editors: Linda Shen, Peter Branton
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