The Kenyan Shilling strengthened against the United States Dollar on Friday, shedding off jitters of a potential weakening.
Traders who spoke to Reuters attributed the significant gain by the local currency to an increase in the Dollar remittance by Kenyans living in the diaspora.
Another reason for the stability of the Shilling on Friday was the increase in dollar inflow from agricultural exports, particularly tea exports which attracted higher returns on the international markets.
According to analysts, an increase in the dollar inflow eased pressure on the Shilling leading to the strengthening of the local unit.
The London Stock Exchange Group (LSEG) quoted the Shilling at 128.25/129.25 to the dollar compared to its closing rate of 128.50/129.50 on Thursday, September 26.
While detailing the improvement, analysts noted that a slight strengthening of the East African currency was anticipated over the next week, following its steady performance since early August.
The Shilling has in recent days recorded improvement against the US currency after strengthening by Ksh1 over the past one week.
During its recent report, LSEG attributed the recent gains to the decision by the US Central Bank to cut its base interest rates by 50 basis points to 4.75 after successfully taming the country's inflation.
The gains by the local unit were also pegged to a surge in demand for the Kenyan Shilling as manufacturers exchanged US dollars for the local unit to make quarterly tax payments.
Kenya's currency has retained its position as the world's best-performing currency after gaining by 17 per cent since February this year.
The Shilling began strengthening in mid-February after President William Ruto's administration decided to repay Ksh310 billion ($2 billion) Eurobond that matured in June this year.
Another reason for the back-to-back gains was due to the oversubscription of the infrastructure bonds issued by the central bank in February.
