Kenyan Shilling Ends Marginally Lower, Weakens by 0.2%

The Kenyan shilling strengthened against the dollar week ending September 10 due to a slowdown in demand for hard currency.

The Kenyan shilling ended marginally lower against major international currencies week ending July 9.

Central Bank of Kenya (CBK) quoted the shilling at Ksh106.96 against the US dollar on July 9 compared to Ksh106.54 per US dollar on July 2.

During the week, the shilling averaged Ksh106.72 against the US Dollar, Ksh133.42 against the Sterling Pound, Ksh120.34 against the Euro, and Ksh99.26 against the Japanese Yen.

The shilling was under pressure due to increased dollar demand from merchandise importers and the energy sector due to the easing of COVID-19 restrictions. 

During the week, the country’s foreign exchange reserves remained adequate at Ksh 1.036 trillion ($9,704 million) equivalent to 5.83 months of import cover as at July 9. 

This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover.

“We expect USD to strengthen on the back of better-than-expected May labour report. Furthermore, the unresolved US-China trade spat signals a RISK-ON sentiment on the world reserve currency,” says Genghis Capital in its weekly commentary.