Kenyan shilling steady ahead of interest rate decision
02 September 2013, 13:08
Nairobi - Kenya's shilling traded flat on Monday as investors waited for the outcome of a central bank interest rate-setting meeting on Tuesday, traders said.
The bank's Monetary Policy Committee (MPC) is expected to leave its benchmark lending rate on hold at 8.50 percent until the end of the year to counter rising inflation and weakening currencies, a Reuters poll showed.
At 0845 GMT, the shilling traded at 87.45/65 per dollar, unchanged from Friday's close.
Traders said there was talk in the market of a possible small rate increase after Kenya's inflation rate climbed to 6.67 percent in the year to August from 6.02 percent a month earlier, though a hold was still widely expected.
"We are looking at interest rates for direction now," said Andlip Nazir, a senior trader at I&M bank.
In the event of a rate hold, Nazir said the shilling was seen moving towards its 87.70 support level.
"The shilling should start weakening as (importer) dollar demand picks up," Nazir said. "We have also seen profit taking on the stock market so we could see money moving out."
"And if the interest rate is on hold, interest yields will not be that attractive, so I think we could see some money going out from (maturing) Treasury bill and Treasury bonds.
Sameer Lagadia, head of trading at Diamond Trust Bank, said technical analysis showed the shilling trading in a range of 87.30-87.70.