The Kenyan shilling weakened slightly against the dollar for the first time in weeks on Wednesday, November 13, as the green buck continued to strengthen following the US presidential election.
The shilling traded at 129.00/129.30 to the dollar today - a slight change from Tuesday’s closing rate of 128.50/129.50.
Traders anticipate the US currency to hold its own against other currencies due to a hike in demand.
“Because of the dollar being attractive, we are now seeing investors starting to buy dollars to repatriate them back to the U.S. markets," one trader to Reuters.
The shilling is not the only currency affected by the US dollar's sudden resurgence. Since the dollar is more attractive after Donald Trump's presidential victory, investors have shifted focus to buying the currency and repatriating it to American markets.
Despite the shilling's slight setback against the dollar, Kenya’s forex market has seen relative stability in recent months.
For the longest time, the shilling traded at Ksh128.50/Ksh129.50, with the highest recorded exchange being recorded on October 19.
This can be attributed to increased diaspora remittances, robust tourism inflows, and higher agricultural export earnings, particularly from tea.
From an annual perspective, the Kenyan shilling has gained by an impressive 17 per cent against global peers, according to a recent report by the Central Bank.
As of November 7, Kenya’s forex reserves reached an impressive USD 9.32 billion (about Ksh1.2 trillion), which was the highest recorded this year and a stark contrast to the recorded figures in January this year when Kenya’s forex reserves stood at USD 6.82 billion (about Ksh879.7 billion at current exchange rates).
The government's decision to offset the Ksh310 billion ($2 billion) Eurobond played a huge role in strengthening the shilling in 2024, as the move attracted more investors who grew more faith in the country's debt-repayment ability.
One of the only key setbacks the Kenyan currency faced this year was credit-rating agencies downgrading Kenya's rating to "Caa1" from "B3" - a move that effectively hurt the local currency.
