National Assembly Budget Committee chairperson Ndindi Nyoro explained the recent fluctuations witnessed in the exchange rate.
According to the Kiharu MP, who was speaking in Kwale County on Thursday, April 26, the recent fluctuations were mostly influenced by local factors rather than external factors.
In particular, he detailed that there were instances of dollar hoarding as those with foreign currency waiting for a more favourable exchange rate of their liking.
A higher exchange rate translates to more money if they are changed to the local currency.
However, he opined that there would be no drastic movements in the exchange rate owing to the monetary policies that have been adopted by the government.
"We have seen stability in the exchange rate market. This has been driven by the monetary policy that Kenya has adopted. We believe that the stability will continue to persist.
"The oscillations in the exchange rate market are driven by local sentiments such as the hoarding of the dollar. The fluctuations we have seen in recent days are driven by sentiments," he stated.
For the last week, the dollar has been exchanged between Ksh130 and Ksh134.
As of April 26, the dollar was trading at Ksh133.1.
Notably, financial experts had projected that the shilling would weaken after making major gains against the dollar. This was attributed to the increasing demand for imports.
"Respondents expect that the resumption of the normal importation cycle and increased demand for dividend repatriation could keep the exchange rate slightly under pressure," read the April Market Perceptions Survey by the Central Bank of Kenya (CBK).
On the other hand, the recent gains of the shilling have been attributed to Kenya's activities in the Eurobond and the increased inflows of the dollar through diaspora remittance among others.
The World Bank also named the shilling as the best-performing currency in the sub-Sahara in 2024.
