Shilling Appreciates During the Week as MPC Set to Meet

Kenyan Shilling

The Kenya Shilling appreciated by 0.2 percent against the US Dollar last week to 6 weeks high of 102.9 shillings from 103.1 shillings recorded the previous week.

According to Cytonn Investments, the appreciation of the shillings was as a result of the continued global weakening of the US Dollar.

Analysts at Cytonn are of the view that the shilling should remain relatively stable against the dollar in the short term, supported by:

1. The calm political environment following the conclusion of the presidential elections,
2. The weakening of the USD in the global markets as indicated by the US Dollar Index, which shed 9.9% in 2017, and 1.8% YTD hitting a 3-year low, and

• CBK’s intervention activities, as they have sufficient forex reserves, currently at USD 7.0 billion

The Monetary Policy Committee

The Monetary Policy Committee (MPC) is set to meet on Monday, 22^nd January 2018 to review the prevailing macroeconomic conditions and give direction on the Central Bank Rate (CBR).

Economic analysts have said that they expect the MPC to maintain rates at the current levels due to a relatively stable macroeconomic environment, as evidenced by:

• Inflation, which eased to 4.5 percent in December from 5.7 percent in October, due to decline in food prices
• The currency, that has been relatively stable, appreciating by 0.5 percent since the last meeting
• The need to support the economic growth after a slowdown witnessed last year. For our comprehensive analysis on the same

East African Region has a Blooming Future

According to the African Economic Outlook for 2018 by the African Development Bank (AfDB), the Eastern African Region shall remain the fastest growing sub-region in Africa, estimated to grow at a rate of 5.6 percent in 2017, 5.9 percent in 2018, and 6.1 percent in 2019.

This growth will be driven by:

• Continued growth in private consumption,
• Public investment in infrastructure,
• A rebound in the agricultural sector, after a harsh year with unfavorable weather conditions in 2017
• Accelerated construction and real estate activity.

The report highlighted that the Sub-Saharan Africa region will be rebound to a growth of 3.5% in 2018 and 3.9% in 2019 from the estimated growth of 2.8% in 2017, noting that most African economies are now more resilient and better placed to cope with harsh external conditions.