Written By Lisa Murimi
The Kenyan Shilling continued its impressive performance against the Dollar on Wednesday, bolstered by a surge in dollar inflows.
Experts attribute this strength primarily to increased remittances from the Kenyan diaspora, which have significantly impacted the currency market.
A Reuters report highlighted that the influx of dollars also came from non-governmental organizations meeting importer demand.
Consequently, banks exchanged the Shilling at rates between Ksh 128.50 and Ksh 129.50 per dollar.
The Shilling has shown remarkable resilience since the beginning of August, improving from Ksh 132.22 against the dollar in the previous week.
This stability contrasts with its rate of Ksh 129.15 per US dollar at the start of the month.
The Central Bank of Kenya (CBK) reported that businesses are reducing their dependence on dollar-denominated loans, a shift reflecting the strengthened Shilling.
Foreign currency loans dropped by 13.3 percent in June and 1.2 percent in April.
The CBK governor noted that this decline in foreign currency loans is indicative of the Shilling’s appreciation. Additionally, the CBK’s Quarterly Economic Review for Q1 2024 revealed a substantial increase in remittances, reaching Ksh 156 billion, with the US being the largest source, followed by the UK and other European countries.
This influx has been crucial for household incomes and bolstering the national economy.
