The Kenyan Shilling on Wednesday strengthened further against the United States Dollar on increased demand for the local currency by companies.
According to Reuters, an increase in demand for the Kenyan shilling eased pressure on the local currency, thus prompting its gain against the US currency.
The manufacturer exchanged US dollars for the local unit as they sought to make quarterly tax payments.
Marginal Improvement
However, the improvement against the green buck was marginal compared to last week’s slip, which saw the shilling shed up to 0.5 units.
As of Wednesday, September 25, the London Stock Exchange Group (LSEG) showed the shilling trading at 128.50 units to the U.S. dollar.
Comparatively, on Friday, September 20, the Kenyan shilling weakened to Ksh129 causing jitters among importers.
The US Fed Cut
The Kenyan shilling was also boosted by foreign currency inflow from the diaspora and investors.
The inflow from diaspora remittance and by investors was mainly catapulted by the US Federal Reserve’s interest Rates Cut.
On September 18, the US Federal Open Market Committee (FOMC) made its first interest rate cuts in four years, slashing the Fed Fund target by 50 basis points to 4.75.
The US Central Bank decided to lower its base interest rate after successfully taming the country's inflation that had for years placed America's economy in a dilemma.
However, most people considered it a tactical move by Joe Biden's administration to lure voters ahead of the general elections. Despite the allegations, the move was a major win for East Africa's most stable economy.
Shilling on a Steady Trajectory
The Kenyan shilling has for eight consecutive months retained its position as the world's best-performing currency. It began strengthening in early February this year following the government's decision to deploy several monetary and fiscal measures.
Among the monetary measures that boosted the local unit included the government's decision to service its Ksh310 billion Eurobon that expired in June.
An oversubscription of the infrastructure bonds issued by the Central Bank in late January also boosted the shilling.
So far, the Kenyan currency has gained by 17 per cent against major global currencies. This is according to data from Kenya's central bank.
