Kenyan Shilling: Is set to Revamp against the US Dollar in the Next Week moved by Lesser Foreign Currency Request from Fuel Importers and Manufacturers

By Abdul Rahman Bangura-

NEW AFRICA DAILY NEWS (NADN) Freetown, Sierra Leone– …Experts envisaged a minute steadiness of the Shilling against the dollar as these sectors have lessened their dollar purchases. As of August 22, commercial banks were quoting the Shilling at 128.50/129.50 per dollar, unchanged from last week. One expert, asserts hope for high market demand, anticipating potential further

strengthening of the Shilling. This reduced dollar request is demanded to remove pressure on exchange rates as a result of contributing to the local currency’s stability against the greenback. The central bank’s recent intervention in exchange rates has already resulted in a period of relative stability for the Shilling over the past week.

The Shilling remains the best-performing currency globally having gained roughly 17% against the dollar in 2024. This is irrespective of a fresh downgrade by Moody’s credit rating agency which lowered Kenya’s credit rating to “Caa1″ from “B3″ due to concerns over external debt repayment and fiscal policies. Diverse reasons doled to the Shilling’s lofty performance in 2023 encircling the Kenya’s repayment of a Sh310 million ($2 billion) Eurobond that mature in June, increased dollar inflows from diaspora remittances, revenue from tea and coffee exports, and the oversubscription of infrastructure bonds issued in February.

Analysts project that the Shilling will likely remain within the range of Sh115.1 to Sh119.1 against the US Dollar throughout the year, with some forecasts suggesting a slight rise to Sh 128.86 in the short term. The Central Bank of Kenya (CBK) has performed a vital role in stabilizing the Shilling’s stability through interventions in the foreign exchange market. These actions have been crucial to mitigate volatility arising from external shocks and domestic economic challenges. The Kenyan economy has faced several obstacles, including high inflation rates and a substantial debt burden. In response, the government has implemented fiscal consolidation measures and sought financial assistance from international organizations such as the International Monetary Fund to restore fiscal discipline and promote sustainable economic growth.

The private sector has also contributed immensely to the Shilling’s performance as increased investments in key sectors such as agriculture, manufacturing, and technology have ignited financial activity and bolstered demand for the local currency. The tourism sector, which was severely impacted by the COVID-19 pandemic, is showing signs of recovery, further supporting the Shilling’s stability. Remittances from the Kenyan diaspora have been a vital source of foreign exchange, providing a steady inflow of dollars into the economy. This consistent influx has played a crucial role in supporting the Shilling and buffering it against external economic pressures.

New Africa Daily News Abdul Rahman Bangura Reports, Africa Correspondent