- On January 15, the shilling officially crossed 160 unit points against the US dollar, the lowest level on record.
- The Central Bank of Kenya blamed the depreciation of the shilling on the $2 billion (Sh300 billion) Eurobond.
Image: FILE
The Kenyan Shilling has continued to significantly gain against the dollar.
On Wednesday the Kenyan shilling was selling at Sh156.70 per US dollar according to the Central Bank of Kenya.
As of Thursday, the Kenyan Shilling is being exchanged at 153.20 per US dollar according to the Central Bank of Kenya while some forex bureaus were doing between Sh152 and Shh157.
The US dollar had risen from an average exchange rate of Sh125 against the shilling in the first quarter of 2023 to Sh162 posted in January 2024.
On January 15, the shilling officially crossed 160 unit points against the US dollar, the lowest level on record.
The Central Bank of Kenya blamed the depreciation of the shilling on the $2 billion (Sh300 billion) Eurobond.
The depreciation made imports more expensive while at the same time pushing up Kenya's debt.
However, the country on Tuesday successfully issued a new Eurobond worth $1.5 billion (Sh238 billion) to buy back the inaugural one due on June 24.
The National Treasury said the new loan divided into three installments has a weight average life of six years and is expected to mature in 2031.
The bond is priced at 10.37 per cent, the highest rate an African state has ever offered.
Financial Risk Analyst Mihr Thakar said it is hard to project how long the shilling will continue to gain.
"It is difficult to say that the movement of the currency will sustain. It is not particularly something I would look at regarding an indication of economic recovery. As long as it is not experiencing a precipitance decline downwards, it is not bad," he said.
He said that there is still a wide margin between the imports which are higher than the exports.
Thakar said that a recovery in the exports will affect the Kenyan shilling's winning streak.
He, however, said that if the Kenyan shilling sustains the gain over time, it should take one or two months for it to have an impact on Kenyan goods.
"It appears that things in the economy have changed for the better because the hurdle of refinancing the Euro Bond 2024 is almost completely historic," he said.
"There are massive bits for the infrastructure bond, over 400 per cent of what was demanded by the government has been received, the domestic borrowing targets are starting to look better off and cash crunch will be elevated to some extent."
Thakar said that the move is an indication of a positive outlook on the economy in the country.
Kenyans on social media have been keeping track of the opening and closing of the currency.
Deputy President Riagthi Gachagua on Thursday advised Kenyans hoarding dollars to sell them immediately saying all indications are that the shilling will continue gaining against the foreign currency in the coming days.
“Na mimi unajua kwa sababu ni mtu ya kuongea ukweli, niliambia wakenya mambo ya ukweli (You know I’m truthful and I told Kenyans the truth),” the DP said.
“Nikaambia hawa mimi nikikaa pale na Rais nikiona vile anapanga uchumi wale walikuwa wameficha madollar nyumbani nikawaambia endeni mtoe dollar zenyu muuze hawakunisikia,” he said.
(I told them when with the President, I see how he is planning the economy, go sell the dollars you’re hoarding at home but they didn’t listen)