NAIROBI: Kenya’s shilling was steady on Friday morning ahead of next week’s Monetary Policy Committee meeting when the central bank is expected to raise rates or announce other measures to support the battered currency.
At 0642 GMT, the shilling was trading at 96.00/20 to the dollar, compared with 96.00/10 at Thursday’s close. Last week, the shilling weakened to around 99, prompting the central bank to sell dollars. It was around 90 at the start of the year. The decision by the central bank to bring forward the next MPC meeting by about a month to Tuesday has fuelled expectations that it will take action to support the currency, with some traders and analysts expecting rates to rise from 8.50 percent.
“The currency will be largely driven by the MPC meeting from here,” said one trader. Another dealer said the central bank could support the currency through announcing further money market operations to draw out more shilling liquidity, rather than raising rates.”Everybody is waiting for Tuesday to find out what they have decided to do,” he said.
The shilling has been under pressure from the global strength of the dollar, a growing current account deficit and sliding foreign exchange earnings from tourism as visitors have stayed away due to a series of Islamist attacks.
