The Kenyan shilling has in the past five weeks consistently performed well against the United States Dollar, maintaining its streak as the best-performing currency globally.
Speaking during the Monetary Policy Meeting held on October 9, the Central Bank of Kenya (CBK) Governor Kamau Thugge revealed that in recent weeks, the regulator put in place a raft of measures to ensure the local unit remained steady.
Thugge noted that the Central Bank purchased dollars from the market to ensure that the Kenyan Shilling remained stable against the US currency amidst political tension that caused jitters among investors.
However, he clarified that such situations took place only on rare occasions. The last five weeks, he revealed necessitated the regulator to step in when the Kenyan shilling showed signs of weakening against major global currencies.
“Our policy is to allow the exchange rate to be determined by forces of supply and demand, however, we do intervene basically to moderate excessive fluctuations in the exchange rates,” Thugge noted.
“That is part of our role and business and the same can be said when there is a need to intervene when the exchange rate begins to weaken.”
As of Tuesday, October 9, the London Stock Exchange Group (LSEG) showed the Kenyan Shilling trading at 128.50 against the dollar, the same as Tuesday’s closing rate.
In his speech, the CBK boss attributed the local currency's stability to dollar inflows from diaspora remittances which have significantly boosted the forex reserves. The Kenyan currency also strengthened as a result of an increase in dollar inflows from the tea sector.
The local unit also stabilized in recent weeks following the government's decision to acquire external loans from multilateral lenders including the World Bank.
"At this time, we do have quite a significant amount of dollars coming in, one, from tea and we have been intervening to also build our reserves and we have strengthened our external buffers," the CBK governor stated.
The Kenyan Shilling began strengthening against the US Dollar in February following the government's major decision to service its Ksh310 billion Eurobond and its decision to issue infrastructure bonds that were oversubscribed.
The Shilling has since retained its position as the best currency, strengthening by about 17.7 per cent for the past nine months. However, the local currency seems to have reached it peak and could potentially retain its current levels for the next few weeks as the Central Bank continues to intervene.
