When you round to the nearest hundreths, you are approximating the second number after the decimal point. Then, a number wich has been rounded to its nearest hundreth is a number with two decimal numbers. Moreover, if the number right of the hundreth is 5 or greater, the hundreths increase one unit, otherwise, remain the same.
Then, 32.697 rounded to its nearest hundreth is 32.70, which is the same as 32.7
Hence, Kim is correct