The Kenyan shilling (KES) has risen to its highest level in 15 months against the dollar, supported by revenue from agricultural exports and a decrease in dollar demand from importers.
In early 2023, dollar scarcity in Kenya resulted in a 12% drop in value during the previous 12 months. This resulted in the Kenya shilling trading at KES 147 to the dollar in March 2023.
🇰🇪The Kenya Shilling Hits a New Low as Dollar Scarcity Bites – a 12% Drop in Value in 12 Months
According to local reports, importers are currently buying a dollar at up to KES 147 to the dollar causing an increase in commodity priceshttps://t.co/zZLUGLqpve #KES #Dollar
— BitKE (@BitcoinKE) March 20, 2023
Since the start of the year [2024], the Kenya Shilling has appreciated by 17 percent against the dollar, making it the best-performing African currency during this period.
According to the East African newspaper, the Central Bank of Kenya (CBK) quoted the exchange rate at an average of 128.66 on June 14 2024, a level last seen on March 8 2023.
A spot-check done by the newspaper on several commercial banks at the end of the week showed that they were selling dollars to retail clients at between KES 130.65 and KES 131.60, and buying the same at between KES 125 and KES 126.60.
“We have seen some inflows during the week from tea exports. The market’s sentiment around the shilling has also been positive due to expected loan inflows from the World Bank, and the early settlement of the Eurobond that was to fall due this month.” said a commercial bank forex dealer.
Earlier in February [2024], Kenya issued a $1.5 billion Euro-bond and spent the proceeds on partially buying back 2024 notes due in June 2024, relieving anxieties that the government would default on its debt obligations.
Moreover, in May 2024, the World Bank approved a significant loan to Kenya under the Fiscal Sustainability and Inclusive Green Growth Development Programme Operation. This loan will strengthen the CBK’s official forex reserves – once it purchases the dollars from the National Treasury – giving the monetary regulator greater ability to protect the Shilling from fluctuations.
The Kenya Shilling has also been supported by a rise in diaspora remittances. In the first four months of this year [2024], remittances increased by 20 percent to $1.6 billion (KES 205.8 billion), up from $1.34 billion (KES 172.4 billion) during the same period in 2023.
According to CBK Governor, Kamau Thugge, tightening the monetary policy has also helped increase investment inflows into the country.
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