Kenya’s Shilling Biggest Weekly Gain On The Dollar

Kenya’s shilling headed for the biggest weekly gain in three years to the dollar as investors refrained from buying the greenback on bets the currency will climb further after the central bank raised rates to a record.The currency of East Africa’s biggest economy strengthened as much as 0.7 percent to 96.55 and traded 0.4 percent up at 96.80 by 10:55 a.m. in Nairobi, extending its increase this week to 3.1 percent, the biggest rally among more than 170 currencies tracked by Bloomberg. The shilling is headed for its best weekly advance since the five days through Nov. 7, 2008.

Kenya’s monetary policy committee increased the key lending rate by 5.5 percentage points to a record 16.5 percent on Nov. 1 as it battles to contain inflation spurred by the worst regional drought in 60 years and higher fuel prices.“The strengthening of the shilling is due to low dollar demand as the market expects the shilling to continue clawing back lost ground to the dollar on accounts of the monetary policy taking effect through reduced money supply,” Bernard Matimu, chief dealer at Nairobi-based NIC Ltd., said by phone.Kenyan inflation accelerated to 18.9 percent in October from 17.3 percent in September, the Nairobi-based Kenya National Bureau of Statistics said in an e-mailed statement on Oct 28, compared with the central bank’s 5 percent target.

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