Bloomberg News

Kenya’s Shilling Gains Seventh Day; Central Bank Holds Rates

February 01, 2012

Feb. 1 (Bloomberg) -- Kenya’s shilling strengthened for a seventh day, the longest winning streak in 18 months, as inflation dropped and the central bank kept rates on hold.

The currency of East Africa’s biggest economy appreciated as much as 0.7 percent and was trading 0.3 percent stronger at 83.63 per dollar at 5:31 p.m. in the capital Nairobi, headed for the longest series of gains since August 2010.

Kenya’s inflation rate fell for a second month to 18.3 percent in January from 18.9 percent in December, the Nairobi- based Kenya National Bureau of Statistics said yesterday in an e-mailed statement. The central bank left the key lending rate at a record high for a second month to support the shilling and ensure consumer prices continue declining.

“The shilling is gaining following the drop in inflation,” Duncan Kinuthia, a dealer at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview.

The Monetary Policy Committee, led by Governor Njuguna Ndung’u, kept the benchmark interest rate at 18 percent, according to an e-mailed statement from the Nairobi-based Central Bank of Kenya.

Tanzania’s shilling strengthened on increased U.S. currency inflows from the agricultural industry and low demand for the dollar. The currency of the second-biggest economy in East Africa appreciated as much as 0.8 percent and traded 0.4 percent stronger at 1,592 at 5:39 p.m. in Dar es Salaam, the commercial capital.

“We have had inflows from corporate and public sector clients seeking shillings to meet month-end obligations,” Alex Ngurusu, head treasurer of CRDB Bank Plc, said by phone today.

Uganda’s shilling depreciated, snapping a three day rally. The currency weakened 0.9 percent at 2,340 per dollar.

--With assistance from David Malingha Doya in Dar es Salaam. Editors: Linda Shen, Alex Nicholson

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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