The Kenya Shilling depreciated marginally by 0.1 percent against the US Dollar last the week to close at 101.3 shillings to the dollar from 101.2 shillings to the dollar the previous week due to increased dollar demand from oil importers.
On a year-to-date basis, the shilling has gained 1.8 percent against the USD. According to Cytonn Investments, the shilling should remain relatively stable against the dollar in the short term, supported by:
- Weakening of the USD in the global markets as indicated by the US Dollar Index, which shed 9.9 percent in 2017, and has shed 2.3 percent YTD, as the Euro and the Sterling Pound continue to strengthen against the USD with the continued recovery of the Eurozone,
- 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 7.2 billion (equivalent to 4.8 months of import cover).
The IMF approved Kenya’s request for a 6-month extension on the USD 1.5 billion stand-by credit facility, allowing for completion of outstanding reviews of the program, before discussing a new program.
Kenya will now have access to the equivalent of 1-month of import cover for the next 6-months, with the review process expected to end in September 2018.
Previously, the IMF had indicated a withdrawal of the facility effective 13th March 2018 as conditions previously agreed upon for the facility to be extended had not been met.