UPDATE 1-Congo ups interest rate for third time in 2 months...

UPDATE 1-Congo ups interest rate for third time in 2 months

KINSHASA, Feb 5 (Reuters) - Democratic Republic of Congo has raised interest rates to 66 percent from 55 percent to fight rising inflation, the Central Bank (CBSU.PK - news) said on Thursday, adding that more needs to be done to stabilise the country's franc.

The rate rise earlier this week is the third in two months as Congo battles a fall in demand for its exports and a slide in the value of its national currency.

The Congolese franc, quoted by the central bank at 712.7 to the dollar on Thursday, has lost around 20 percent of its value since September.

'We've changed it (the interest rate) to 66 percent, which is still linked to rising inflation ... It seems to be stabilising a bit, but more still needs to be done,' Willy Mudiay, the Central Bank's director of credit, told Reuters.

The latest increase brings the cumulative rise in Congolese interest rates in the past two months to 38 percentage points -- in stark contrast to moves by many central banks around the world to cut interest rates as the global economy slows rapidly.

The huge central African country has seen demand for its minerals, oil, timber and diamond exports slump since mid-2008.

The International Monetary Fund said in December that Congo's foreign currency reserves were at a five-year low. Since then the government has spent more of its funds intervening in currency markets to support the Congolese franc.

The government said in January that it would accelerate efforts to secure a $200 million loan from the IMF's Exogenous Shock Facility to help cope with the effects of plunging exports and the scaling back of several large planned mining projects.

Foreign investors poured into Congo's mining sector following post-war elections in 2006, encouraged by surging metals prices. But many have cut back or abandoned projects as commodities markets have slumped due to slack global demand.

In December the IMF cut its 2009 economic growth forecast for Congo by more than half to 4.4 percent, and lowered its projection for direct foreign investment by over two thirds to $800 million.

(Reporting by Joe Bavier; Writing by David Lewis; Editing by Alistair Thomson) Keywords: CONGO DEMOCRATIC/RATES (Dakar Newsroom +221 33 864 5076)