Kenyan Shilling Shed Off 1.8 Percent In The Month Of April

During the month, the Kenya Shilling appreciated by 1.8 percent against the US Dollar to close the month at 107.8 shillings, from 109.8 shillings recorded at the end of March 2021, mostly attributable to the lackluster dollar demand from general importers.

During the week, the Kenyan shilling appreciated against the US dollar by 0.6 percent to 107.8 shillings from 108.5 shillings recorded the previous week.

On a YTD basis, the shilling has appreciated by 1.2 percent against the dollar, in comparison to the 7.7 percent depreciation recorded in 2020.

The shilling will continue facing pressure from the rising uncertainties in the global market due to the Coronavirus pandemic, which has seen investors continue to prefer holding their investments in dollars and other hard currencies and commodities.

Continued strengthening of the US Dollar against major currencies as evidenced by a YTD gain of 2.1 percent in the ICE U.S. Dollar Index as compared to a 6.7 percent decline in 2020.

The ICE U.S. Dollar Index is a benchmark index that measures the international value of the US Dollar where investors can monitor the value of the US Dollar relative to a basket of six other world currencies.

The shilling will receive support from the Forex reserves, currently at USD 7.7 billion which is 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.

Read More:

• Shilling Oscillates At 109.6 Against The Dollar During The Week
• Shilling Appreciates Against The Dollar After Many Days

The improving current account position which narrowed to 4.8 percent of GDP in the 12 months to December 2020 compared to 5.8 percent of GDP during a similar period in 2019 will support the shilling.

The improving diaspora remittances evidenced by a 27.1 percent y/y increase to USD 290.8 million in March 2021, from USD 228.8 million recorded over the same period in 2020, has cushioned the shilling against further depreciation.