In the wake of an underperformance by the local currency against the United States Dollar, the Kenyan Shilling stabilized on Thursday against the greenbuck.
According to Reuters, the Kenyan Shilling gained ground following the intervention by the country's Central Bank that boosted the local currency and stopped it from sliding further.
Nonetheless, the Kenyan currency's stability was forecasted not to last long with traders predicting further weakening of the shilling which had been shedding strength for the past two weeks.
Experts who spoke to the London-based publication revealed the Kenyan shilling could potentially weaken in the coming days due to high dollar demand by foreigners.
The increased demand for the greenbuck was expected to cause pressure on the exchange rates and thus result in the weakening of the Kenyan Shilling
As of Thursday, July 25, commercial banks quoted the shilling at 132.50/133.50 against the dollar, the same as Wednesday's exchange rates.
Meanwhile, the Kenyan Shilling weakened in the past two weeks as a result of the recent anti-government demonstrations that caused jitters among investors.
The protests similarly caused panic among importers who rushed to purchase more dollars as they feared the demonstrations could cause instability in the exchange rates.
"There is a bit of concern about the recent developments. It's still just a watch and see," noted an analyst.
The local currency also lost ground due to a downgrade by Moody's credit rating agency that cited the country's inability to manage its bulging external debts.
Moody's credit rating agency downgraded the country's credit ratings to "Caa1" from "B3" and projected Kenya's debt affordability to remain weaker for longer.
In April this year, the Kenyan currency was ranked the best performing globally after it gained by about 17 per cent against major world currencies.
Its gains were attributed to several factors including a Ksh310 billion Eurobond buyback and the sale of infrastructure bonds which were oversubscribed.
Other factors included; increased foreign currency inflows from coffee and tea exports, as well as higher diaspora remittances.
