Shilling steady ahead of inflation data

• Year-on-year inflation is expected to drop to 6.75 per cent in August, thanks to good harvests and lower petrol prices, paving the way for a hefty interest rate cut when policymakers meet on September 5, a Reuters poll showed.

The Kenyan shilling held steady against the dollar on Tuesday as the market awaited inflation data for August that will determine the size of an interest rate cut next week.

At 0719 GMT, commercial banks quoted the shilling at 84.05/25 per dollar, barely changed from Monday's close of 84.00/20.

Year-on-year inflation is expected to drop to 6.75 per cent in August, thanks to good harvests and lower petrol prices, paving the way for a hefty interest rate cut when policymakers meet on September 5, a Reuters poll showed.

"A rate cut has already been priced in, but how aggressively they cut will determine the direction (of the currency)," said Christopher Muiga, a senior trader at Kenya Commercial Bank.

Market participants said they expected the shilling to trade in an 83.70-84.50 range this week, with the level of importers' demand for dollars to meet their end month obligations playing an important role.

Reuters