The Kenyan Shilling may just be Africa’s best-performing currency
The Kenyan shilling has recently risen to levels not seen in over a year. The currency rose to a 15-month high against the US dollar.
The last time the currency was this strong was in March 2023. From Shs161/$ to now Shs 128.66/$, the Kenyan Shilling remains one of the best-performing currencies on the continent.
A report by the East African showed that the Kenyan currency recently recorded a 15-month high at Shs 128.66 per dollar. This gain resulted from inflows from agriculture exports amid reduced demand for dollars among importers.
Since January, the Central Bank of Kenya which on Friday announced the new rate, has used real traded rates in the interbank market to compute the official rate, enhancing the official rate’s conformity with market conditions.
“We have seen some inflows during the week from tea exports. The market’s sentiment around the shilling has also been positive due to expected loan inflows from the World Bank, and the early settlement of the Eurobond that was to fall due this month.” said a commercial bank forex dealer.
The Bank’s governor Kamau Thugge, also relayed that the Shilling’s gain against the Dollar is partly due to tightened monetary policy which aided in the improvement of investment inflows into the country.
A surge in transfers from the diaspora has boosted the shilling as well. Remittances increased by 20% to $1.6 billion (Sh205.8 billion) in the first four months of the year from $1.34 billion (Sh172.4 billion) in the same period of 2023.
The growth of the Kenyan Shilling since the start of the year
In April, the World Bank ranked the Kenyan shilling as the best-performing currency in Sub-Saharan Africa. A report by the global lender revealed that the incremental value of the shilling was directly linked to the hike in the base lending rate by the Central Bank of Kenya (CBK).
This ranking followed the Shilling’s 12 years high gain which was reported in February. The Kenyan Shilling experienced a significant resurgence owing to a wave of investor confidence that followed the government’s large inflows to settle the $2 billion Eurobond.
The currency at the time was trading below Sh153.75 at some commercial banks which was the strongest it had been since November 2023, as it has managed to wipe out all the losses incurred during the year.
At the start of February, Kenyan banks had quoted nothing surpassing Sh164.50/$1 dollars. Also, in January, the Kenyan Shilling experienced a gain of 0.73 percent against the US dollar. The currency had not experienced this sort of gain in over 3 years, as the Shilling went from 161.36 to 160.19.
This denotes that the currency has from the start of the year gone from Shs 161/$ to now Shs 128.66/$, a far cry from an earlier assessment where hope for the country’s currency seemed bleak, following a report.
