Financial experts have forecasted a depreciation of the Kenyan Shilling against the United States Dollar starting from mid-next week.
Analysts attribute this anticipated weakening to increased demand for dollars from manufacturers and importers.
Starting next week, there is expected to be a surge in the demand for foreign currency as importers and manufacturers seek scarce dollars to complete their transactions in international markets.
This increased demand for the dollar is likely to exert pressure on exchange rates, consequently leading to a depreciation of the Kenyan currency.
“Manufacturers and importers are starting to cover their mid-month and month-end needs,” noted one of the Financial experts.
“I think the shilling will weaken towards the middle of next week," the expert added.
As of Thursday, June 20, Commercial banks quoted the shilling at 128.50/129.50 per dollar, compared with last Thursday’s closing rate of 128.00/129.00.
The shilling was also projected to weaken due to the Dollar resurgence witnessed in recent weeks that has caused several global currencies to ease.
Despite these developments, the Kenyan shilling continues to hold its position as the best-performing currency globally, having appreciated by 22 per cent since the beginning of this year.
According to a recent World Bank report, the local currency has been ranked as the top-performing currency in Sub-Saharan Africa, marking four consecutive months of gains.
The shilling's strong performance has been attributed to several factors, including the government's decision to repay a portion of the Ksh310 billion ($2 billion) Eurobond maturing in June this year.
Additionally, increased dollar inflows from coffee and tea exports, as well as higher diaspora remittances, have bolstered the currency's performance.
