On Thursday, June 13, the Kenyan shilling strengthened to a record 128 units against the dollar, buoyed by inflows from the tourism and agriculture sectors.
Commercial banks quoted the shilling at 128.00/129.00 per dollar, marking an improvement from the previous Thursday's closing rate of 129.50/130.50.
According to Reuters, there was significant demand for the local currency as tourists visiting Kenya sought to exchange their dollars for Kenyan shillings. This surge in demand contributed to a scarcity of the shilling, which in turn stabilised its exchange rate.
Due to the stability of the Kenyan shilling, the Energy and Petroleum Regulatory Authority (EPRA) has announced reduced fuel prices for June to July. Diesel will decrease by Ksh6.08 per litre, and Kerosene will see a reduction of Ksh5.71 per litre, underscoring the impact of the shilling's strength on fuel price stability.
Following the review, the updated pump prices in Nairobi will be Ksh189.84 per litre for Super Petrol, Ksh173.10 per litre for Diesel, and Ksh163.05 per litre for Kerosene.
"There is more dollar supply than there is demand. We have the agricultural sector, we also have the tourism sector," said one commercial bank dealer.
The analysts projected the Kenyan shilling to firm against the dollar over the next week to Thursday due to increased foreign currency inflows.
Similarly, the shilling has continued to stabilize due to a hike in dollar inflows from the agricultural sector particularly, from tea and coffee exports.
Earlier this week, the local currency depicted gains which were attributed to exports from horticulture, tea and coffee. Exporters earned huge amounts of dollars from the sale of the produce.
This prompted a demand for the shilling as the exporters exchanged their dollar income for the Kenyan currency.
The shilling has strengthened against the dollar for the last five months, gains which were attributed to the government's stringent monetary policy measures.
The measures that stabilized the local currency include the Ksh310 billion ($2 billion) Eurobond buy-back in February and the issuance of infrastructure bonds by the Central Bank of Kenya.
In its April 2024 economic outlook, the World Bank ranked Kenya's Shilling as the best-performing currency in the Sub-Saharan region.
Additionally, the Central Bank for Kenya in its recent Monetary Policy Meeting (MPC) revealed that the local currency had gained by 17 per cent against other global currencies.
Kenya's shilling is set to hit record gains even as the government prepares to make another Eurobond repayment before the 24th of this month to complete the buyback of the $2 billion debt taken in 2014.
According to CBK Governor Kamau Thugge, the buyback will be done using part of the Ksh156 billion loan proceeds from the World Bank.
