Kenya Currency Falls Against US Dollar on Import Payments’ Demand

The Central Bank of Kenya conducts a survey on remittance inflows every month through formal channels that include commercial banks and other authorised international remittances service providers in Kenya.

Kenya’s currency Wednesday exchanged at 111.7735  against the dollar, owing to the high demand for import payments.

COMMERCIAL BANKS’ AVERAGE EXCHANGE RATES FOR
MAJOR CURRENCIES/KES (CLOSING OF MARKET) ON
10-Nov-21
CURRENCYMEANBUYSELL
US DOLLAR111.7735111.6735111.8735
STG POUND151.1271150.9747151.2794
EURO129.2012129.0706129.3318
SA RAND7.25307.23947.2666
KES / USHS31.581831.508831.6548
KES / TSHS20.586320.523220.6495
KES / RWF9.12019.10649.1338
KES / BIF17.806417.703517.9093
AE DIRHAM30.431530.401430.4617
CAN $89.361689.267476.830289.4559
S FRANC121.6649121.5296121.8002
JPY (100)98.068597.959298.1777
SW KRONER12.834412.820712.8481
NOR KRONER12.919912.905812.9340
DAN KRONER17.251817.236217.2674
IND RUPEE1.50041.49901.5019
HONGKONG DOLLAR14.346314.333514.3591
SINGAPORE DOLLAR82.504982.415982.5940
SAUDI RIYAL29.802329.774829.8298
CHINESE YUAN17.449917.432917.4669
AUSTRALIAN $81.672981.588781.7572

During the week ending 5 Nov, the Kenyan shilling depreciated by 0.3% against the US dollar to close the week at Kshs 111.5, from Kshs 111.2 recorded the previous week.

In October, the shilling ended the month 0.8% weaker against the US dollar, this was linked to obstinate dollar demand as dollar liquidity thinned.

Market Analysts are of the view that the shilling could remain on the back foot, potentially breaking above the 112 level in November. 

“Current account pressure will persist as import levels rise. Export earnings will recover further but may not match the growth in demand. Healthy FX reserve position will continue to provide cushion but deployment may be limit by the persistent uncertainty,” Stephanie Kimani, Analysts from NCBA said.

The shilling is however expected to be supported by: the Forex reserves, currently at USD 9.1 bn (equivalent to 5.5-months of import cover), which 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.

In addition to improving diaspora remittances which have increased 18.8% y/y increase to USD 309.8 million in September 2021, from USD 260.7 million recorded over the same period in 2020, which has continued to cushion the shilling against further depreciation.