Kenyan Shilling Appreciated By 0.6% against the US Dollar in November

The Kenya Shilling appreciated by 0.6 percent against the USD during the month of November to close at 103.1 shillings from 103.8 shillings in October.

According to Cytonn Investments Limited, the appreciation of the shilling for the month of November was primarily due to increased foreign investor inflows into the equities market and primary bond auction, following a relatively peaceful election period.

On a year to date basis, the shilling has depreciated against the dollar by 0.6 percent. Experts at Cytonn is of the view that the shilling should remain relatively stable against the dollar in the short term, supported by:

1. The expected calm in the political front, following the conclusion of the presidential elections and the swearing in of the President.
2. The weakening of the USD in the global markets, as indicated by the US Dollar Index, which has shed 8.7 percent year to date.
3. The CBK’s activity, as they have sufficient forex reserves, currently at USD 7.1 billion (equivalent to 4.7 months of import cover).

The inflation rate for the month of November declined by 1.0 percent points, to a four-year low of 4.7 percent, from 5.7 percent in October.

The decline, according to the Kenya National Bureau of Statistics, was primarily driven by a drop in food prices, which dropped by 1.3 percent m/m and 5.8 percent y/y, due to improved weather conditions in most parts of the country.

Some of the indices that increased are:

1. A rise of 1.7 percent m/m in housing, water, electricity, gas and other fuels, brought about by increased cost of electricity, house rents, and other cooking fuels.
2. An increase of 0.6 percent in the cost of fuel, following increased pump prices of petrol and diesel. Below is a summary of key changes in the Consumer Price Index (CPI) in November.