Kenyan Shilling to Remain Stable in 2020

Treasury Bill auction

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

The Kenyan shilling is expected to remain stable in the 2020 supported by the Central Bank of Kenya (CBK) in the short term through its sufficient reserves of USD 8.8 billion and an improving current account position.

“We expect the shilling to remain stable within a range of Ksh101.0 and Ksh104.0 against the USD in 2020 with a bias to a 2.4% depreciation by the end of 2020,” Cytonn Investments projects in their 2020 markets outlook.

High Oil Import Bill, Subdued Diaspora Remittance to Weigh Down the Shilling

However, pressure on the Kenyan shilling is expected to arise from: increased oil imports bill, subdued diaspora remittances growth following the close of the 10.0% tax amnesty window in July which has seen cumulative diaspora remittances increase by a marginal 5.0% in the 12-months to November 2019 to USD 2.8 billion, from USD 2.7 billion.

Also, repayments of the principal loan extended to Kenya for the first phase of the standard gauge railway is expected to cause a decline in the country’s forex reserves with a good chunk of forex reserves in Kenya being from the issuance of debt.

In 2019, the alternative investment firm says the Shilling remained resilient appreciating by 0.5% against the USD during the year to close at Ksh 101.3, from Ksh 101.8 in 2018, due to inflows of hard currency from remittances by Kenyan workers abroad and offshore investors.