Kenyan Shilling Depreciated 0.7% Against the Dollar In November

The Kenya Shilling depreciated by 0.7 percent against the US Dollar during the month of November to 102.5 shillings from 101.8 shillings at the end of October.

The depreciation of the local currency was driven by dollar demand by companies in the oil, manufacturing and energy sectors to close end of year orders ahead of the December holidays.

During the week, the Kenya Shilling depreciated by 0.1 percent against the US Dollar to close at 102.5 shillings from 102.4 shillings the previous week, due to the end-month demand from oil importers and manufacturers amidst excess liquidity in the market.

On a YTD basis, the shilling has appreciated by 0.7 percent against the US Dollar with market analysts from Cytonn Investments insisting that the shilling should remain relatively stable against the dollar in the short term.

The Shilling will enjoy the following in the short-term:

The narrowing of the current account deficit to 5.3 percent in the 12-months to September 2018, from 6.5 percent in September 2017, attributed to improved agriculture exports, increased diaspora remittances, strong receipts from tourism, and lower food and SGR-related equipment relative to 2017.

Improving diaspora remittances, which increased by 6.9 percent m/m growth in diaspora remittances in the month of October 2018 to USD 219.2 million from USD 205.1 million recorded in September.

The y/y growth of diaspora remittances came in at 18.2 percent from USD 185.5 million recorded in October 2017. Cumulatively, total diaspora remittances rose by 39.5 percent in the 12 months to October 2018 to USD 2.6 billion from USD 1.9 billion recorded in a similar period in 2017.

The CBK’s activities in the money market, such as repurchase agreements and selling of dollars, and high levels of forex reserves, currently at USD 8.0 billion, equivalent to 5.3-months of import cover, compared to the one-year average of 5.1 months.