Kenyan Shilling Up By 0.2% Against The Dollar

The Kenyan shilling has continued being on the receiving end against the US Dollar amidst the rising cases of Covid-19.

During the week, the Kenya Shilling appreciated by 0.2 percent against the US Dollar to close the week at 106.3 shillings from 106.5 shillings recorded the previous week.

According to traders, the slight appreciation of the local currency was as a result of low dollar demand from merchandise importers, coupled with dollar inflows from horticulture exports.

On a YTD basis, the shilling has depreciated by 4.9 percent against the dollar, in comparison to the 0.5 percent appreciation in 2019.

Cytonn Investments, in their weekly report, say that they expect the pressure on the shilling to continue in the coming days.

Pressure for the shilling will come from the demand from merchandise and energy sector importers as they beef up their hard currency positions amid a slowdown in foreign dollar currency inflows.

READ: Shilling Dips Further Against The Dollar As Covid-19 Reigns Supreme

Currently, there is a subdued diaspora remittance evidenced by the 9.0 percent decline to USD 208.2 million in April 2020, from USD 228.8 seen the previous month, mainly due to the decline in economic activities globally, coupled with increased prices of household items leading to lower disposable income.

Key to note, the Central Bank of Kenya (CBK) expects a 12.0 percent decline in remittances in 2020.

The shilling is however expected to be supported by high levels of forex reserves, currently at USD 9.2 bn (equivalent to 5.6-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.

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