The Kenyan shilling maintained a stable trading range on Tuesday, exchanging at around Ksh129.23 per US dollar, amid continued support from the Central Bank of Kenya and balanced dollar supply in the interbank market.
The currency held at approximately Ksh150.70 per euro and Ksh172.85 per British pound, reflecting minor moves tied largely to global developments in foreign exchange markets.
Against the Japanese yen, the shilling traded at Sh0.868, Sh18.68 against the South African rand, Ksh93.40 against the UAE dirham and Ksh101.44 against the Saudi riyal according to indicative mid-rates posted by the Central Bank.
With respect to Asian currencies, the shilling was listed at Ksh0.089 against the Chinese yuan, Ksh14.47 against the Indian rupee and Ksh23.04 against the Canadian dollar. In the East African region, it stood at Ksh36.72 to the Ugandan shilling and Ksh81.05 to the Tanzanian shilling.
Currency traders say the local unit has now hovered in a tight Ksh129.15 to Ksh129.25 band for almost two weeks as seasonal inflows from tea and horticulture exports help absorb strong corporate demand for dollars from oil marketers and manufacturing firms.
While easing inflation expectations and improved interbank liquidity have supported confidence in the shilling, analysts warn that underlying pressure still exists due to Kenya’s large import bill, external debt repayments and slow exports of other commodities.
Diaspora remittances remain the single largest source of hard currency, keeping reserves above four months of import cover and helping suppress speculative activity. However, foreign exchange dealers caution that any sudden rise in international oil prices or delay in inflows could tip the shilling toward the Ksh130 mark.
Businesses continue to hedge against currency volatility amid concerns that sustained import demand could erode short term gains achieved through tighter monetary policy and regulatory measures.
Written By Ian Maleve
