The Kenyan shilling was stable on Wednesday against the United States Dollar, extending its streak as the best-performing currency globally.
According to traders who spoke to Reuters, the local unit retained its value against the greenbuck on Wednesday as exporters converted their foreign currencies to the local currency to process payrolls. The decision increased dollar inflow which eased pressure on the foreign exchange and consequently led to the stability of the Kenyan shilling.
As of Wednesday, October 23, the Kenyan shilling traded at Ksh128.50 against the US dollar, the same levels as Tuesday, October 22. The stability meant that the importers would continue purchasing products at the international market at cheaper prices.
Analysts who spoke to the British publication revealed that the local currency was projected to stabilise further in the coming weeks as traders expressed confidence in the forex market.
The Kenyan shilling had been predicted to weaken slightly due to the ongoing political tensions in the country, however, despite the prediction, the local currency has continued to perform remarkably well against major global currencies. “I foresee a very steady currency as we head to the end month,” noted an expert.
The local currency has been retailing at the same levels since last week as demand for the foreign currency by manufacturers and importers matched its supply by exporters, particularly from the tea and coffee sub-sectors.
Interventions by the Central Bank of Kenya have also seen the Kenyan shilling stabilise further against the dollar as the regulator moved in to save the local unit from volatility.
Central Bank Governor Kamau Thugge speaking at the Monetary Policy Meeting held on October 9, revealed that in recent weeks, the regulator put in place a raft of measures to ensure the local unit remained steady.
'“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,” he added.
The local currency began its winning streak in February this year after the National Treasury repaid a Ksh310 billion loan using proceeds from another loan acquired by President William Ruto during the same period.
Kenya's decision to repay the loan that was scheduled to mature in June this year strengthened the shilling to a record of Ksh126 against the dollar before it was later established at Ksh128 and Ksh129 respectively.
