Kenya Shilling weakens ahead of Central Bank policy meet

Eyes will be on Monetary Policy Committee (MPC) meeting to be held today at the Central Bank of Kenya (CBK) with the market expecting an interest rate hike  to support the shilling. The local currency was trading at Sh96.45/65 to the dollar yesterday, compared with 96.00/20 at Friday’s close.

John Njenga, a trader at Commercial Bank of Africa, said the shilling lost ground due to a major telecom firm buying dollars earlier in the day for importing equipment.

“It was buying dollars for a big size, so that’s the main reason that pushed it up (weaker),” he said.

CBK is expected to raise rates for the first time in two years.

“This MPC meeting will be chaired by the current Deputy Governor Haron Sirima, who is the vice chairman of the committee. A consensus will be arrived at the meeting and all we have to do is wait,” said  a Manager, Communications Division at CBK Samson Burgei.

CBK moved its July meeting to tomorrow in the wake of the local currency’s fall to a three and half year low.

“The shilling has already benefited from the MPC’s decision to bring forward their meeting a month earlier,” said Jibran Qureishi, an economist at Standard Bank.

“We definitely expect the MPC to revise the rate upwards to protect the local unit which has been on a sharp fall, especially over the last two months,” said Ms Faith Mwangi, an analyst at Standard Investment Bank in an interview.