Kenyan shilling firms up against dollar, inflation falling

The Kenyan shilling has held firm against the US dollar amid low demand for the dollar.

According to the Central Bank of Kenya, the shilling is now trading at 102.05 buying, 102.25 selling to the dollar.

It is however exchanging at 108.37 buying, 108.60 selling to the Euro and at 153.87 buying, 154.21 selling to the Sterling Pound.

Closer home, the Kenyan unit is trading at 7.24 buying, 7.35 selling to the Rwandese Franc, 21.10 buying, 21.24 selling to the Tanzanian shilling and at 32.56 buying, 32.72 selling to the Ugandan shilling.

Meanwhile, Kenya’s inflation rate is likely to start falling when heavy rains stop, the Central Bank Governor said on Wednesday.

Last month, year-on-year inflation rose to its highest level in 15 months, at 7.32 percent, after prices of some foodstuffs shot up. Rains have been particularly heavy in recent weeks, blamed on the el Nino weather phenomenon.

“We don’t like the headline (inflation) number because we are being driven by el Nino and other things,” Governor Patrick Njoroge told a news conference. “We expect it to come down. There is no doubt about it in my mind.”

The heavy rains have washed away or made impassable dirt roads, cutting off some farmers from markets. Some crops have also been damaged.

The central bank raised the benchmark lending rate by a total of 300 basis points in June and July after the shilling weakened sharply, helping stabilise the currency.

The governor said that a more stable shilling meant the impact of the currency devaluation was “dwindling”, noting that non-food items had been dropping.

Additional reporting by Reuters