Business
Kenya, Nigeria and Uganda move to shore up currencies
Kenya, Uganda and Nigeria bucked a global trend by raising interest rates to record levels in the past week as they struggle to protect their currencies and curb soaring inflation.
Nigeria’s central bank boosted its key rate by 275 basis points to 12 percent on Oct. 10 at an emergency meeting, less than a week after Kenya and Uganda lifted their policy rates by 4 percentage points each. The currencies of the two East African nations have lost a fifth of their value this year, the worst- performers in the world, according to Bloomberg data.
Central banks are going to try to look after their currencies to steer inflation away from increasing as significantly as it has.
Before Nigeria’s rate decision, the naira slumped 7.4 percent against the dollar on the interbank market this year, reaching as low as 166.60 on Oct. 10. The currency surged as much as 4.6 percent the day after the rate announcement.
The worst drought in 60 years in East Africa fueled inflation in Kenya and Uganda, driving investors to abandon the currencies just as risk aversion globally picked up, compounding their plunge. Inflation in Uganda surged to 28.3 percent in September and reached 17.3 percent in Kenya.
