RTRS:Kenyan shilling stable vs dollar, inflation eyed
NAIROBI (Reuters) - The Kenyan shilling held steady against the dollar on Friday, but traders said it could weaken in anticipation that inflation would fall, creating room for policymakers to cut interest rates.
Typically, low interest rates make credit cheaper for importers and easier for commercial banks to hold long dollar positions, putting the shilling under pressure.
At 0716 GMT, commercial banks quoted the shilling at 84.20/40 per dollar, the same level it closed Thursday.
"A big rate cut could be in the offing next week," said John Muli, a trader at African Banking Corporation.
Year-on-year inflation for August, due out on Friday, is expected to come in at 6.75 percent from 7.74 percent in July, helped by good food harvests and lower petrol prices, according to a Reuters poll of 11 analysts.
Traders said lower inflation pointed to a further rate cut when the Monetary Policy Committee meets on September 5, following a 150 basis point cut to 16.5 percent at the last meeting in July.
