The Kenyan shilling strengthened further against the United States Dollar on Wednesday, November 20, and Thursday, November 21, shedding off fears of a potential weakening.
The local unit stabilised as manufacturers converted their foreign currency to Kenyan shilling, easing pressure on the foreign exchange rates.
According to Reuters, there was a high demand for the local currency as the manufacturers sought the local currency to clear their monthly statutory payments.
As of Wednesday, the London Stock Exchange Group (LSEG) quoted the Kenyan shilling at 128.70 compared to Tuesday's closing rate of 128.75.
However, the shilling's improvement against the green buck was marginal compared to last week’s slip, which saw the local unit shed up to 0.5 units.
The local currency has also been projected to gain further against major global currencies on muted foreign currency demand from the manufacturing sector.
The recent increase in diaspora remittances which currently stand at Ksh623 billion was also projected to positively impact the shilling as more Kenyans living in the diaspora sent more dollars back home.
In October this year, Kenyans living in the diaspora sent home Ksh56.7 billion ($437.2 million), an increase of 22.9 per cent compared to the same period last year when the foreign remittance stood at Ksh46 billion ($355.6 million).
The Central Bank of Kenya (CBK) in its weekly bulletin published on Friday, November 15, revealed that the United States was the largest source of diaspora remittances to Kenya, accounting for 53.7 per cent of the contributions channelled into the country in October 2024.
The shilling's latest trajectory comes hardly a week after it depreciated against the US currency due to an increase in the demand for the dollar across multiple sectors.
“We’ve been seeing the dollar appreciate against all currencies globally, including the shilling. Because of the dollar being attractive, we are now seeing investors starting to buy dollars to repatriate them back to the US markets," noted forex experts.
Despite the recent slip, the local currency has maintained its streak as the best-performing currency globally for the tenth consecutive month this year following the government's decision to repay the Ksh310 billion Eurobond that matured in June this year.
