The Kenyan shilling remained broadly stable in Monday’s trading, exchanging at Ksh129.22 per US dollar, marginally firmer than last week’s close of Ksh129.24, as tight liquidity conditions in the interbank market offset persistent demand for hard currency from energy and manufacturing importers.
Against the euro, the local unit traded at Ksh150.68, while exchanging at Ksh172.90 per Britishpound, reflecting continued weakness against major European currencies on the back of a strong dollar globally.
The shilling also traded at Ksh0.868 per Japanese yen, Ksh18.69 per SouthAfrican rand, and Ksh93.36 per UAE dirham, according to Central Bank indicative rates.
Currency dealers attribute the recent stability to continued Central Bank support through open market operations and stepped-up supervision of forex interbank trades, which has helped contain excess volatility.
Market participants, however, warn that underlying pressure remains due to a widening current account deficit driven by elevated import costs of fuel, fertiliser, pharmaceuticals, and capital goods.
With foreign exchange inflows from tea, horticulture exports and diaspora remittances yet to pick up strongly after a seasonal drop in June, the balance remains tilted toward higher demand for dollars in the near term.
Analysts say unless export receipts and remittances rally or the Central Bank intervenes more aggressively, the shilling could drift toward Ksh130 to the dollar in the coming weeks.
The currency has depreciated more than 16 percent over the past 12 months but has traded in a narrow band of Ksh129.15–Sh129.25 over the past two weeks, signalling cautious stability amid global currency turbulence.
Traders also remain watchful of global developments, noting that expectations of prolonged high interest rates by the US Federal Reserve could keep the dollar strong and sustain pressure on emerging-market currencies like the shilling.
Domestic companies with foreign currency loans face rising repayment costs, while importers brace for higher landed prices if the shilling weakens further. For consumers, a weaker shilling risks stoking inflation particularly on petroleum products and imported food items even as the tax revenue authority ups efforts to collect more dollars from exporters.
Written By Ian Maleve
