Kenyan Shilling Remains Resilient Against The US Dollar

During the week, the Kenyan Shilling appreciated marginally against the US Dollar by 8.6 bps, to Kshs 129.4 from the Kshs 129.5 recorded the previous week.

On a year-to-date basis, the shilling has depreciated by 6.8 bps against the dollar, compared to the 17.4% appreciation recorded in 2024.

The strength of the Kenyan shilling will continue to be supported by:

Diaspora remittances which stood at stood at a cumulative USD 4,956.5 mn in the twelve months to February 2025, 14.5% higher than the USD 4,329.7 mn recorded over the same period in 2024. These have continued to cushion the shilling against further depreciation. In the February 2025 diaspora remittances figures, North America remained the largest source of remittances to Kenya accounting for 53.0% in the period,

The tourism inflow receipts which came in at Kshs 452.2 bn in 2024, a 19.8% increase from Kshs 377.5 bn inflow receipts recorded in 2023, and owing to tourist arrivals that improved by 14.6% to 2,394,376 in 2024 from 2,089,259 in 2023.

Improved forex reserves currently at USD 10.0 bn (equivalent to 5.1-months of import cover), which is above the statutory requirement of maintaining at least 4.0-months of import cover and above the EAC region’s convergence criteria of 4.5-months of import cover.

The shilling is however expected to remain under pressure in 2025 as a result of:

An ever-present current account deficit which came at 4.0% of GDP in Q3’2024.

The need for government debt servicing, continues to put pressure on forex reserves given that 62.1% of Kenya’s external debt is US Dollar-denominated as of September 2024.

Key to note, Kenya’s forex reserves decreased by 0.5% during the week, to USD 10.0 bn from the USD 10.1 bn recorded in the previous week, equivalent to 5.1 months of import cover to remain relatively unchanged from the months of import cover recorded last week, and above the statutory requirement of maintaining at least 4.0-months of import cover.

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