Nov. 29 (Bloomberg) -- Kenya’s shilling gained the most in a week against the dollar ahead of the central bank’s monthly meeting to review the benchmark interest rate on Dec. 1.
The currency of East Africa’s biggest economy climbed 0.8 percent to 89.60 per dollar by 11:53 a.m. in Nairobi, the biggest gain since Nov. 22, according to data compiled by Bloomberg.
“We expect the Monetary Policy Committee to tighten further to combat inflation, and that should be positive for the local unit,” Christopher Makombe, a currency trader with Standard Chartered Bank Kenya Ltd. in Nairobi, said by phone today. “The governor has made it clear that as long as inflation keeps rising, the central bank will keep increasing its rate.”
Kenya’s central bank raised its benchmark rate to a record 16.5 percent at its last policy meeting to stabilize the shilling and curb inflation, which, at 18.9 percent, is more than double the government’s target. Governor Njuguna Ndung’u has said he will keep monetary policy “tight” until price pressures ease.
Tanzania’s shilling fell for the first session in four, declining 0.3 percent against the dollar to 1,689.70.
The Ugandan shilling gained for a second session, reaching its strongest level in five days, advancing 0.8 percent to 2,560 per dollar as of 11:47 a.m.
“The shilling has strengthened ahead of a Treasury bills auction tomorrow which is expected to attract offshore players because of the good yields offered by the central bank,” Timothy Muzoora, a currency trader at Cairo International Bank Ltd., said by phone from Kampala.
The nation’s central bank will tomorrow offer 120 billion shillings ($46.9 million) worth of three, six and 12-month bills. The three-month bills attracted a yield of 22.171 percent at the last auction on Nov. 16.
--With assistance from Eric Ombok in Nairobi. Editors: Peter Branton, Linda Shen
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