The Kenyan shillings has continued to remain resilient against the US Dollar, the Sterling Pound and the Euro, further proving those who had predicted its doom wrong.
Last week, the Kenya Shilling remained stable against the US Dollar at 101.0 shillings to the dollar supported by inflows from diaspora remittances and reduced dollar demand from importers.
The Kenya Shilling has appreciated by 2.2 percent year to date. Economic analysts at Cytonn still insist that the shilling will still hold on, on the short term.
According to stats released during the week, the current account deficit narrowed to 5.8 percent in the 12-months to June 2018, from 6.3 percent in March 2018, attributed to improved agriculture exports, and lower capital goods imports following the completion of Phase I of the Standard Gauge Railway (SGR) project.
There are stronger inflows from principal exports, which include coffee, tea, and horticulture, which increased by 1.7 percent during the month of July to 24.7 billion shillings from 24.3 billion shillings in June, with the exports from horticulture improving by 9.1 percent.
There has been an improving diaspora remittance, which increased by 71.9 percent y/y to USD 266.2 million in June 2018 from USD 154.9 million in June 2017 and by 4.9% m/m, from USD 253.7 mn in May 2018.
The largest contributor of diaspora remittances for Kenya was North America at USD 130.1 million attributed to;
- Recovery of the global economy
- Increased uptake of financial products by the diaspora due to financial services firms, particularly banks, targeting the diaspora
- New partnerships between international money remittance providers and local commercial banks making the process more convenient
- High levels of forex reserves, currently at USD 8.5 billion, equivalent to 5.6-months of import cover, compared to the one-year average of 5.4-months.
The year is almost coming to an end but some analysts insist that the shilling will receive the hit in one way or another but the shilling seems to be determined to prove them wrong.