Kenya Shilling Defies Volatility, Closes at KSh 103.9

Remittance inflows continue to provide a stable source of foreign exchange for Kenya and key support for many households

Dr Patrick Njoroge, CBK Governor Displaying some of the new currency Notes

The Kenya Shilling gained against the dollar for the first time week ending September 20 to close Ksh 103.9. 

“It exchanged at KSh 103.91 per US Dollar on September 19, compared to KSh 103.78 on September 12,” according to the Central Bank of Kenya weekly bulletin. 

This was supported by inflows from diaspora remittances amidst thin dollar demand from merchandise importers. 

Early in the week, the Kenya Shilling was termed as the most stable currency in Africa despite recent volatilities by Charles Robertson, Renaissance Capital’s global chief economist. 

“I agree with Central Bank of Kenya that the shilling’s stability is organic, otherwise, we could not have witnessed this kind of resilience,’’ Robertson told investors during the Renaissance Capital’s 5th Annual East Africa Investor Conference held in Nairobi.

CBK governor Patrick Njoroge attributed the shilling’s strength to a drop in the current account deficit, which stands at 4.2 percent of GDP, down from 10.4 percent four years ago.“I want to emphasis that we have a flexible exchange rate policy. We only intervene to minimise volatility,’’ Njoroge said.

National Treasury in its 2019 Budget Review paper further says the Kenya Shilling exchange rate has continued to display relatively less volatility, compared to most sub-Saharan African currencies. 

“ This stability reflected strong inflows from tea and horticulture exports, strong diaspora remittances and tourism receipts.” “However, against the US Dollar, the Shilling weakened in August 2019 exchanging at 103.3 compared to the same period in 2018 where Ksh 100.6 were required to buy one Dollar. 

The depreciation of shilling is attributed to increased demand for import and excess liquidity in the money market.”