Kenyan Shilling Continues To Shine Against The Dollar, Cuts Public Debt

During the week, the Kenya Shilling gained against the US Dollar by 0.8 percent, to close at Kshs 130.7, from Kshs 131.8 recorded the previous week according to a report by Cytonn.

On a year-to-date basis, the shilling has appreciated by 16.7 percent against the dollar, a contrast to the 26.8 percent depreciation recorded in 2023.

Read Also: Karcher Invests Ksh 428 Million For A Regional Distribution Centre At Tatu City

The shilling will continue being supported by:

1. Diaspora remittances stood at a cumulative USD 4,329.7 mn in the 12 months to February 2024, 7.5% higher than the USD 4,026.2 mn recorded over the same period in 2023, which has continued to cushion the shilling against further depreciation. In the February 2024 diaspora remittances figures, North America remained the largest source of remittances to Kenya accounting for 56.0% in the period, and,

2. The tourism inflow receipts came in at USD 352.5 bn in 2023, a 31.5% increase from USD 268.1 bn inflow receipts recorded in 2022, and owing to tourist arrivals that improved by 27.6% to 182,000 in the 12 months to January 2024, from 151,000 recorded during a similar period in 2023.

Read Also: Kenya’s Jambojet Sets Eyes On More Growth As It Hits 10

The shilling is however expected to remain under pressure in 2024 as a result of:

1. An ever-present current account deficit which came at 3.5% of GDP in Q3’2023 from 6.4% recorded in a similar period in 2022,

2. The need for government debt servicing, continues to put pressure on forex reserves given that 67.5% of Kenya’s external debt was US Dollar denominated as of September 2023, and,

3. Dwindling forex reserves, currently at USD 7.1 mn (equivalent to 3.8 months of import cover), which is below the statutory requirement of maintaining at least 4.0 months of import cover.

Key to note, Kenya’s forex reserves increased marginally by 0.8% during the week to remain relatively unchanged at USD 7.1 bn, equivalent to 3.8 months of import cover relatively unchanged from the months of import cover recorded the previous week, and remained below the statutory requirement of maintaining at least 4.0 months of import cover.

Read Also: Central Bank Of Kenya Approves LemFi Remittance To Kenya In Partnership With Wapi Pay