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DRC hikes key rate to 20% to stabilise franc: central bank

PUBLISHED: Tue, 27 Jun 2017 09:44:50 GMT

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Democratic Republic of Congo raised its key interest rate to 20 percent from 14 percent on Monday as it sought to stabilise its volatile franc currency, the central bank said in a statement.

The Congolese franc has lost half of its value against the dollar over the past year due to low tax revenues from foreign investors and high government deficits.

“In the aim of confronting the rising exchange rate trend of the Congolese franc and reducing the pace of interior price increases, the Central Bank of Congo has just, once more, tightened its monetary policy,” the statement said.

The bank last adjusted rates in February.

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The economy of Congo – Africa’s top copper producer – has been hit hard by low commodity prices over the last two years that have reduced government revenues.

The central bank said this month it expects economic growth of 3.1 percent this year with year-end inflation on track to reach 33.12 percent, up from 25.04 percent in 2016, as the franc continues to lose ground against the dollar.

(Reporting by Amedee Mwarabu; writing by Joe Bavier; editing by Jonathan Oatis)