Kenya Shilling Holds Steady Amid Subdued Dollar

Remittances in Kenya are the biggest source of foreign exchange, ahead of tourism, tea, coffee, and horticulture exports.

Kenya shilling remained steady, closing at KSh 108.4 against the US dollar on Friday. This was mainly due to subdued dollar demand from importers.

It exchanged at KSh 108.38 per US dollar on September 17 compared to KSh 108.40 per US dollar on September 10 said the Central Bank in its Weekly Bulletin terming the trend ‘relatively stable against major international and regional currencies’.

However, during the week, on Tuesday the currency hit a historic low to trade at 108.55 to the US dollar. 

According to Cytonn Investments, on a Year To Date (YTD) basis, the shilling has depreciated by 7.0 percent against the dollar, in comparison to the 0.5 percent appreciation in 2019.

On the other hand, CBK said its high levels of forex reserves, currently at USD 8,838 million (5.36 months of import cover) as at September 17, is above the statutory requirement of maintaining at least 4.0-months of import cover, and the EAC region’s convergence criteria of 4.5-months of import cover.

National Treasury expects interest and exchange rate stability “will be safeguarded over the medium term”.

They also expect inflation to be contained within the 2.5 percent to 5.0 percent band.