Kenyan shilling seen pressured ahead of rate meeting
29 August 2013, 15:09
Nairobi - The Kenyan shilling held steady on Thursday as the market looked to a September 3 monetary policy meeting for direction, but traders said the threat of foreign military intervention in Syria might begin dictating the local market.
"Guarded trading is likely to take over ... on the added thrust of the Syrian standoff," said Commercial Bank of Africa in a daily note.
The shilling was posted at 87.60/70 per dollar at 0958 GMT, barely changed from Wednesday's close of 87.50/70.
A Reuters survey of 16 economists taken over the past week forecast Kenyan interest rates would stay on hold until at least the end of this year to counter rising inflation and an under-pressure currency.
The same forecast was made for interest rates in Ghana and Nigeria.
Kenya held its benchmark lending rate at 8.50 percent in July, with the central bank saying it wanted to allow more time for earlier cuts to filter through the economy.
Kenyan inflation KECPI=ECI rose to 6.02 percent in the year to July from 4.91 percent in June, hitting its highest level for a year and edging closer to the upper limit of the government's preferred band of 3-7 percent.
"End-month demand is over now. Everyone is looking to see what the Monetary Policy Committee will say. From there we can have a clear perspective," said Robert Gatobu, a trader at Bank of Africa.
But Gatobu acknowledged a foreign attack on Syrian soil would alter the market dynamic.
"Everyone thinks guys will move to the dollar as a safe haven if they attack Syria ... that will eventually hurt the shilling."