The Kenyan shilling has performed well against the United States dollar in recent months, maintaining its streak as one of the best-performing currencies globally.
Speaking on Wednesday, August 13, during the Monetary Policy Committee (MPC) meeting, Central Bank of Kenya Governor Kamau Thugge stated that the shilling remained stable, primarily supported by diaspora remittances.
He also attributed the shilling's stability to diversified foreign exchange inflows from offshore banks and agricultural exports, particularly coffee and tea.
According to the CBK boss, the local unit was projected to stabilise further against the dollar on the back of improved diaspora remittances, which, according to Thugge, were expected to increase by 6 per cent by the end of the year.
"The Kenyan shilling has remained stable, supported by foreign exchange inflows from diaspora remittances, offshore banks, and coffee, and we expect this stability to continue into the near term," Thugge said.
Adding, "We see remittances increasing by 5.8 per cent, and for the whole year, we are projecting remittances to increase by 6 per cent."
Thugge further revealed that the Central Bank conducted a market perception survey regarding the exchange rate projections. As per the survey results, most respondents expect the shilling to strengthen further.
He disclosed that 77 per cent of the banks and 71 per cent of non-bank respondents expect the shilling to strengthen, mainly supported by improved diaspora remittances and enhanced investor sentiments.
However, a few respondents expect the local unit to weaken slightly soon due to foreign exchange pressure from increased imports and external debt payments.
As of Thursday, August 14, the Central Bank quoted the shilling trading at Ksh129.23 against the U.S. dollar, the same rate as on Wednesday, August 13.
The shilling has been relatively stable for months now after gaining the stability pathway in the first half of 2024, largely attributed to increased dollar inflows from bond sales by the government.
In June last year, the shilling was ranked as the best-performing currency globally after it strengthened by 17 per cent against major global currencies, including the dollar, euro and pound.
