Kenya’s shilling weakened for a fifth day, its longest losing streak in more than four months, as the central bank cut its benchmark interest rate more than expected.
The currency of East Africa’s biggest economy depreciated 0.1 percent to 86.70 a dollar in the capital, Nairobi, having traded as low as 86.73 a dollar earlier. The shilling has retreated 0.5 percent in the past five days, according to data compiled by Bloomberg.
The Monetary Policy Committee, led by central bank Governor Njuguna Ndung’u, reduced the rate for the fourth time since July, cutting it to 9.5 percent from 11 percent, the Nairobi- based Central Bank of Kenya said in an e-mailed statement. Seven out of 10 economists and analysts surveyed by Bloomberg had forecast a 1 percentage-point reduction.
“The shilling responded to the cut as expected,” Duncan Kinuthia, the head of trading at Commercial Bank of Africa Ltd., said by phone from Nairobi. “The depth of the cut is a pointer to the desire to spur private sector credit growth.”
The country’s monetary authority has lowered its lending rate by 7 percentage points since July to stimulate growth. Economic growth slowed to 3.4 percent in the first quarter and 3.3 percent in the second. Expansion quickened to 4.7 percent in the third quarter.
“There is positive outlook on the economy including stability in both products and foreign exchange markets reflected in stable inflation and the exchange rate,” the committee said in the statement.
The regulator lowered the benchmark interest rate by 2 percentage points to 11 percent when it last convened on Nov. 7. Inflation slowed for a 13th straight month to 3.2 percent in December, below the government’s target of 5 percent, the Kenya Bureau of Statistics said Dec. 28.
The central bank accepted 600 million shillings ($6.9 million) of seven-day repurchase agreements from bids of 2.6 billion shillings received, a bank official who asked not to be identified in line with policy, said by phone today. The bank had offered 2 billion shillings.
The Ugandan shilling appreciated 0.2 percent to 2,700 a dollar, while Tanzania’s shilling weakened 0.9 percent to 1,608 a dollar.
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