The Kenyan shilling is expected to weaken further against the United States dollar in 2018.
“Our forward exchange rate forecast for the Kenya shilling to the US dollar is 106 at the end of 2018, 108.5 in 2019, and 110.8 in 2020,” said Jeff Gable during the launch of the Barclays Africa 2017/2018 macro-economic highlights report on Tuesday in Nairobi.
Gable noted that their expectation the KES will appreciate but not nearly to the forwards.
Besides, the Kenya shilling has been much less volatile over the last 2 years when compared to other SSA currencies.
“There have been significant changes in the forex exchange markets in the last year, but Kenya has the most stable forex exchange rates as compared to other countries in Sets within it that are not doing well. Then the shilling might get into a weakness or pressure from the global weakness. That means the CBK will then have to come in and try to support the currency so that we do not significant or shock in the currency,” Barclays Bank East Africa Regional director Anthony Mulisa.
On the other hand, Cytonn Investments project the shilling to remain relatively stable against the dollar in the short term.
This will be supported by expected calm in the political front as the government settles into office, the weakening of the USD in the global markets as indicated by the US Dollar Index, which shed 9.9 percent in 2017, and 0.7 percent YTD, and the CBK’s intervention activities, as they have sufficient forex reserves, currently at USD 7.0 bn (equivalent to 4.7 months of import cover).
Last year, the shilling traded in the 103.00-104.00 range against the US dollar for the better part of the year largely supported by the Central bank.
Read: Kenyan Shilling Proved Resilient But Should we be Worried in 2018?
Barclays Africa Group Limited (BAGL) is projecting a 5.5 percent economic growth for Kenya this year, up from the 5 percent recorded last year driven by a rebound in tourism activities, improved agricultural yield, and political stability.