Shilling Still Shining But Pressure Expected From US-Iran Tension

The Kenya Shilling appreciated by 0.7 percent against the US Dollar during the month of January to 100.6 shillings from 101.3 shillings at the end of December.
The marginal appreciation of the local currency during the month of January according to Cytonn Investments was mostly supported by inflows from tourism and diaspora remittances amid slow demand from importers.
During the week, the Kenya Shilling appreciated against the US Dollar by 0.3 percent to close at 100.6 shillings from 100.9 shillings recorded in the previous week.
On a YTD basis, the shilling has appreciated by 0.7 percent against the dollar, in comparison to the 0.5 percent appreciation in 2019.
“In our view, the shilling should remain relatively stable against the dollar in the short term with a bias to a 2.4% depreciation by the end of 2020,” said Cytonn.
The shilling continues to enjoy the narrowing of the current account deficit, with preliminary data indicating that Kenya’s current account deficit was equivalent to 4.6 percent of GDP in 2019, from 5.0 percent recorded in 2018.
This was mainly driven by lower imports of SGR-related equipment, resilient diaspora remittances which cumulatively stood at USD 2.8 billion in December 2019, a 3.7 percent increase from the USD 2.7 billion recorded in December. This was also as a result of strong receipts from transport and tourism services with preliminary data indicating that the number of tourists landing in the country stood at 132,019 in the month of December, which was a 9.0 percent increase, compared to the 121,070 recorded in November 2019,
There are high levels of forex reserves, currently at USD 8.5 billion (equivalent to 5.2-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.
The shilling continues to be shielded by foreign capital inflows, with investors looking to participate in the domestic equities market. The Central Bank of Kenya (CBK) has remained supportive of its activities in the money market, such as repurchase agreements and selling of dollars.
The shilling is likely to experience pressure from the increased oil imports bill, as a result of the U.S – Iran diplomatic row, which has seen average crude oil prices increase by 9.9 percent to an eight-month high to USD 72.0 a barrel in Jan 2020, from USD 65.5 a barrel in December 2019.
There is likely to be a subdued diaspora remittances growth following the close of the 10.0% tax amnesty window in July, which has seen cumulative diaspora remittances increase by 3.7% in the 12-months to December 2019 to USD 2.8 billion from USD 2.7 billion in 2018.
READ: Shilling Still On A Upward Trajectory Against The Dollar
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
- January 2025 (118)
- February 2025 (114)
- January 2024 (238)
- February 2024 (227)
- March 2024 (190)
- April 2024 (133)
- May 2024 (157)
- June 2024 (145)
- July 2024 (136)
- August 2024 (154)
- September 2024 (212)
- October 2024 (255)
- November 2024 (196)
- December 2024 (143)
- January 2023 (182)
- February 2023 (203)
- March 2023 (322)
- April 2023 (298)
- May 2023 (268)
- June 2023 (214)
- July 2023 (212)
- August 2023 (257)
- September 2023 (237)
- October 2023 (264)
- November 2023 (286)
- December 2023 (177)
- January 2022 (293)
- February 2022 (329)
- March 2022 (358)
- April 2022 (292)
- May 2022 (271)
- June 2022 (232)
- July 2022 (278)
- August 2022 (253)
- September 2022 (246)
- October 2022 (196)
- November 2022 (232)
- December 2022 (167)
- January 2021 (182)
- February 2021 (227)
- March 2021 (325)
- April 2021 (259)
- May 2021 (285)
- June 2021 (272)
- July 2021 (277)
- August 2021 (232)
- September 2021 (271)
- October 2021 (304)
- November 2021 (364)
- December 2021 (249)
- January 2020 (272)
- February 2020 (310)
- March 2020 (390)
- April 2020 (321)
- May 2020 (335)
- June 2020 (327)
- July 2020 (333)
- August 2020 (276)
- September 2020 (214)
- October 2020 (233)
- November 2020 (242)
- December 2020 (187)
- January 2019 (251)
- February 2019 (215)
- March 2019 (283)
- April 2019 (254)
- May 2019 (269)
- June 2019 (249)
- July 2019 (335)
- August 2019 (293)
- September 2019 (306)
- October 2019 (313)
- November 2019 (362)
- December 2019 (318)
- January 2018 (291)
- February 2018 (213)
- March 2018 (275)
- April 2018 (223)
- May 2018 (235)
- June 2018 (176)
- July 2018 (256)
- August 2018 (247)
- September 2018 (255)
- October 2018 (282)
- November 2018 (282)
- December 2018 (184)
- January 2017 (183)
- February 2017 (194)
- March 2017 (207)
- April 2017 (104)
- May 2017 (169)
- June 2017 (205)
- July 2017 (189)
- August 2017 (195)
- September 2017 (186)
- October 2017 (235)
- November 2017 (253)
- December 2017 (266)
- January 2016 (164)
- February 2016 (165)
- March 2016 (189)
- April 2016 (143)
- May 2016 (245)
- June 2016 (182)
- July 2016 (271)
- August 2016 (247)
- September 2016 (233)
- October 2016 (191)
- November 2016 (243)
- December 2016 (153)
- January 2015 (1)
- February 2015 (4)
- March 2015 (164)
- April 2015 (107)
- May 2015 (116)
- June 2015 (119)
- July 2015 (145)
- August 2015 (157)
- September 2015 (186)
- October 2015 (169)
- November 2015 (173)
- December 2015 (205)
- March 2014 (2)
- March 2013 (10)
- June 2013 (1)
- March 2012 (7)
- April 2012 (15)
- May 2012 (1)
- July 2012 (1)
- August 2012 (4)
- October 2012 (2)
- November 2012 (2)
- December 2012 (1)