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Kenya shilling seen weaker vs dlr on expected rate cut

NAIROBI, Oct 1 (Reuters) - The Kenyan shilling

was

stable against the dollar on Monday helped by current high interest rates, but was expected to weaken on the back of an anticipated cut after inflation fell for the 10th straight month in September.

The shilling was at 85.20/40 per dollar at 0811 GMT, unchanged from Friday's close.

Year-on-year inflation

fell to 5.32 percent in September from 6.09 percent previously, signalling to another rate cut in November, after a record 350 basis point cut to 13 percent in September. The exact date of the rate setting meeting has not been announced yet.

"Should the central bank lower the rate, that could affect the shilling because that is an indication to (commercial) banks to reduce their lending rates. So more liquidity in the market, more spending, more importing, more pressure on the shilling," said Peter Mutuku, a trader at Bank of Africa.

"Looking forward, ... GDP (gross domestic product) figures show that the economy is slowing down, so you will probably see the MPC (Monetary Policy Committee) trying to give some impetus to the economy," said Chris Muiga, a trader at Kenya Commercial Bank.

"(Policymakers) will probably loosen rates again. In the long run, it's shilling negative."

Kenya's economy grew 3.3 percent in the second quarter of this year from 3.5 percent in the same period last year, the slowest quarterly growth since the fourth quarter of 2009, official data showed on Friday.

The central bank's regular mop-up of excess shilling liquidity through repurchase agreements, has helped stabilise the local currency, which is down 0.3 percent in the year to-date.

This has caused the weighted interbank rate to steadily rise to 8.47 percent on Friday, up from 6.40 on Sept 10th, Mutuku said.

Muiga said the shilling would get respite from tea exports from the weekly auction on Tuesday.

Technical analysis of the shilling's 14-day and 50-day weighted moving average shows the shilling was expected to keep weakening in the short term.

...........................Shilling spot rates

.....................Shilling forward rates

.......................Cross rates

..................................Local contributors

.......................Central Bank of Kenya Index

.....................Kenyan Bonds contributor pages

...............Treasury bill yields

..................Central bank open market operations

.........................Horizontal repo transactions

,

................Daily interbank lending rate

.............................Kenya Bond pricing

..................Real time Africa economic data

...........................African economic news

.................................NSE-20 Share Index

.................................NSE All Share Index

...........................FT NSE Kenya 15 Index

.......................... FT NSE Kenya 25 Index

SPEED GUIDES:

(Reporting by Beatrice Gachenge; Editing by George Obulutsa and Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)

((nairobi.newsroom@reuters.com)(Tel: +254202224717))

Keywords: KENYA MARKETS/