Kenyan Shilling Ends November With Neck High Against The Dollar

By Juma / December 2, 2019 | 9:15 am

The Kenyan Shilling Dollar Turnover Kenyan Shilling

The Kenya Shilling appreciated by 0.4 percent against the US Dollar during the month of November to 102.8 shillings from 103.2 shillings at the end of October.

According to a report by Cytonn, the local currency was supported by inflows from diaspora remittances and portfolio investors buying government debt.

During the week, the Kenya Shilling depreciated by 1.4 percent against the dollar to close at 102.8 shillings owing to a surge in the end month dollar demand from merchant importers and the energy sector.

On a YTD basis, the shilling has depreciated by 0.9 percent against the dollar, in comparison to the 1.3 percent appreciation in 2018.

“In our view, the shilling should remain relatively stable against the dollar in the short term,” said Cytonn Investments.

The shilling has continued to enjoy the narrowing of the current account deficit, with preliminary data indicating that Kenya’s current account deficit improved by 11.8 percent during Q2’2019.

This was mainly driven by the narrowing of the country’s merchandise trade deficit by 1.7 percent and a rise in secondary income (transfers) balance by 5.1 percent.

READ: 40% Of African Countries Are At Distress Level In Terms Of Debts

Improving diaspora remittances, which have increased cumulatively by 7.0 percent in the 12-months to October 2019 to USD 2.8 bn, from USD 2.6 bn recorded in a similar period of review in 2018.

The rise is due to:

- 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

Foreign capital inflows, with investors looking to participate in the equities market has also supported the shilling with CBK remaining supportive activities in the money market, such as repurchase agreements and selling of dollars.

There are high levels of forex reserves, currently at USD 8.7 billion (equivalent to 5.4-months of import cover), above the statutory requirement of maintaining at least 4.0-months of import cover, and the EAC region’s convergence criteria of 4.5-months of import cover.

About Juma

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

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