The Kenya Shilling depreciated by 0.4 percent against the US Dollar during the month of April to 101.1 shillings from 100.8 shillings at the end of March.
The slight dip according to Cytonn Investments was driven by increased dollar-demand from oil and merchandise importers.
During the week, the Kenya Shilling appreciated by 0.4 percent against the US Dollar to close at 101.1 shillings from 101.5 shillings in the previous week, driven by inflows from offshore investors buying government bonds.
On a YTD basis, the shilling has appreciated by 0.8 percent against the US Dollar in addition to 1.3 percent in 2018.
“In our view, the shilling should remain relatively stable against the dollar in the short term,” said analysts from Cytonn Investments.
The shilling continues to enjoy the narrowing of the current account deficit with preliminary data on balance of payments indicating continued narrowing to 4.7 percent of GDP in the 12-months to February 2019, from 5.5 percent recorded in February 2018.
The decline of the current account deficit has been attributed to improved agriculture exports, increased diaspora remittances, strong receipts from tourism, and lower food and SGR-related equipment relative to 2017.
Kenya’s diaspora remittances increased by 11.1 percent to USD 221.0 million in March 2019, from USD 199.0 million in February 2019, and the 12-months cumulative inflows having increased by 26.3 percent to USD 2.7 billion in March 2019, from USD 2.2 billion in March 2018. The rise is due to:
The Central Bank of Kenya (CBK) has remained supportive of the local currency with its activities in the money market, such as repurchase agreements and selling of dollars.
Currently, there are high levels of forex reserves, currently at USD 8.4 billion, equivalent to 5.4-months of import cover, above the statutory requirement of maintaining at least 4-months of import cover, and the EAC region’s convergence criteria of 4.5-months of import cover.