Why Kenyan shilling stabilize against the US dollar after days of weakening
3 min read
Following many days of decline, the Kenyan shilling strengthened against the US dollar on Friday, May 3
Following many days of decline, the Kenyan shilling strengthened against the US dollar on Friday, May 3.
Traders attributed the local currency’s growth to a rise in remittance inflows from Kenyans residing abroad.
The shilling’s stability on Friday was also attributed to the sharp increase in export revenue, especially in tea, which saw better prices on global markets.
Increased transactions by non-governmental organizations, in the opinion of forex dealers, were also a major factor in the local currency’s stability relative to the US dollar.
The shilling remained stable as a result of the non-governmental sector’s increased dollar inflow matching the manufacturing sector’s demand for dollars.
According to international exchange experts, the shilling traded at Ksh134.50/135.50 per US dollar on Friday, the same level at which it ended on Thursday, May 2.
The shilling has depreciated against the greenback over the last three weeks as manufacturers increased their demand for the dollar.
The fuel and manufacturing sectors requested more dollars to purchase raw materials for their industries, and as a result, they required foreign money to execute international operations.
The local currency has been falling since mid-March, reversing some of 2024’s gains due to a sharp return in manufacturing-sector foreign-currency demand.
Despite the three-week dip, the shilling was ranked as the best-performing currency globally, with a 16% advance, a modest reduction from its 20% increase in early March.
The shilling began to gain momentum against major currencies throughout the world, including the dollar, in February of this year.
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The gains were linked to the government’s decision to buy back a portion of its Ksh 31 billion ($2 billion) 2014 Eurobond, which matures in June this year.
The repayment was made with a new Eurobond for Ksh233 billion ($1.5 billion) issued by the government in February according to the Treasury.
Despite the three-week dip, the shilling was ranked as the best-performing currency globally, with a 16 percent advance, a small reduction from its 20 percent increase in early March.
The shilling began to rise in February of this year, strengthening against major currencies throughout the world, including the dollar.
The gains were linked to the government’s decision to repurchase a portion of its Ksh 31 billion ($2 billion) 2014 Eurobond, which matures in June this year.
The repayment was made with another new Eurobond for Ksh233 billion ($1.5 billion) issued by the government in February, according to the Treasury.
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