The Kenya Shilling, during the week, registered an appreciation of 0.3% against the US Dollar, to close at 101.0 percent, from 101.3 shillings the previous week.
The increase was attributed to positive sentiments from investors interested in Kenyan assets as foreign exchange reserves improved to 8.8 billion US dollars when proceeds from the Eurobond were called in by the Treasury.
On a year-to-date basis, the shilling has gained 2.1 percent against the US dollar. According to Cytonn Investments, the shilling should remain relatively stable against the dollar in the short term, supported by:
- The weakening of the US dollar in the global markets as indicated by the US Dollar Index, which shed 9.9 percent in 2017, and has shed 2.9 percent YTD, as the Euro and the Sterling Pound continue to strengthen against the USD with the continued recovery of the Eurozone. The USD weakened further despite the Fed rate hike that took place during the week,
- Improving diaspora remittances, which increased by 26.6 percent to USD 203.8 million in December 2017 from USD 160.9 million in December 2016, driven by a 39.2 percent and 30.9 percent increase in remittances from North America and Europe, respectively, and,
- CBK’s intervention activities, as they have sufficient forex reserves, currently at USD 8.8 billion – equivalent to 5.9 months of import cover – an increase from USD 7.2 billion previously following the receipt of proceeds from the recently issued Eurobonds, and the USD 1.5 billion – equivalent to approximately 1 month of import cover – stand-by credit and precautionary facility by the IMF, still available until September 2018, after which a new facility will be discussed.