The Kenyan Shilling, one of Africa’s worst-performing currencies in 2023, recently experienced a gain of 0.73 percent against the US dollar. The currency has not had this sort of gain in over 3 years, as the Shilling went from 161.36 on Monday to 160.19. This marks an interesting milestone given the currency’s seemingly persistent depreciation.
A report by the Kenyan business news publication BusinessDaily showed that the Kenyan Shilling deviated from its current downward trajectory, which has persisted for months, and moved in the opposite direction gaining almost 1% against the dollar.
According to official data from the Central Bank of Kenya (CBK), the currency last made comparable gains during the COVID-19 pandemic on December 23, 2020, when it increased by 1.46 percentage points against the dollar.
At the time, the local currency had gained to 109.44 versus the dollar, up from 111.04 on December 22.
“If you are getting days of strengthening, then that begins telling you that the market is improving. It is a positive sign and shows that liquidity may be returning to the interbank forex market,” Muathi Kilonzo, frontier equity sales and head of equities Kenya at EFG Hermes told the Business Daily.
Kenya’s currency fell by more than 26% in the 12 months ending in December 2023, more than tripling its depreciation rate from 8.3% the year prior.
According to a Bloomberg report, Kenya last year experienced its worst currency hit in over 3 decades, alongside Nigeria which experienced its worst currency performance since 1999.
See the story here: Nigeria and Kenya suffer their worst currency hits in over 20 years with no hope in sight
Just last week, Kenya’s currency reached a new low at Sh160.23 per dollar. This was due to the fact that the dollar demand from the energy and manufacturing sectors had put tremendous pressure on the Kenyan Shilling over the last 2 weeks, according to currency traders in the country.
Source: BI
