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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenyan inflation rate likely drop to within 7.5 per cent target range

NAIROBI (Xinhua) -- Kenya’s overall inflation rate is expected to drop to within the target range of 7.5 percent in the next two months, the country’s apex bank on Tuesday.

Central Bank of Kenya (CBK) Governor Professor Patrick Njoroge told a media briefing in Nairobi that the decline from the current level of 9.2 percent will be largely driven by lower food prices.

"As of now, Kenya is on very solid ground to reduce its inflation rate to less than 7.5 percent. Currently, it is difficult to get more precise projections because they will depend on the price of the common staples food," Njoroge said.

The apex bank has set an inflation target of between 2.5 and 7.5 percent.

Njoroge added that overall inflation in the country has been on downward trend lately due to the impact of the recent rains on food production as well as government measures to control rising food prices.

He noted that the price of agricultural commodities are not driven by monetary dynamics unlike other commodities.

On Monday, the Central Bank of Kenya’s Monetary Policy Committee retained the benchmark rate at 10 percent in order to continue to anchor inflation expectations.

According to the Governor, the agricultural sector is not performing as well as the other sectors of the economy despite the lower food prices.

"The other sectors such as manufacturing, real estate, Information and Communication Technology and transport have continued to show dynamism even with the slowdown in private sector lending," Njoroge said.
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UPDATE:

Kenya shilling steadies on central bank move

NAIROBI (Xinhua) -- The Kenya shilling was steady against the U.S. dollar on Tuesday following support from the central bank amid rising inflows.

The local unit traded at an average of 103.90, largely the same level it was at the start of the week on Monday.

The apex bank during the Tuesday trading session quoted the shilling at 103.91, nearly the same level the local unit was on Monday.

On the other hand, commercial banks placed the value of the Kenya shilling at between 103.90 and 104.05 as traders noted a surge in inflows, especially from investors seeking to buy Treasury bonds.

Analysts attributed the firmness of the shilling mainly to intervention from the Central Bank of Kenya (CBK).

CBK Governor Patrick Njoroge in a press conference in the capital Nairobi said Kenya’s foreign exchange reserves currently standing at 7.8 billion dollars, an equivalent of 4.63 months of import cover, were adequate to cushion the shilling.

Njoroge blamed the turbulence the shilling is currently facing to intense speculation ahead of the general election.

However, with the support from the central bank, analysts noted that the shilling is set to stabilize in the coming days.

The apex bank is also expected not to allow the currency to fall below a level that would destabilize the market.

             

 

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