The Kenya Bankers Association has predicted fluctuations in the dollar-shilling exchange rate after the greenback fell to Ksh145.8 on Thursday.
In a statement issued by the Kenya Bankers Association led by NCBA Group Managing Director John Gachora on Friday, the exchange rate will witness varied movements owing to market dynamics such as supply and demand.
The fall of the dollar to Ksh145.8 on Thursday is the biggest gain for the shilling in months given that it traded at Ksh 153.2 on Wednesday.
"At market close this evening, the dollar buying and selling rates printed at an average price of Ksh145 per dollar and Ksh148KES per dollar, respectively, reflecting considerable gains from recent trading ranges.
"Given that Kenya liberalised its capital account in the 1990s, the exchange rate is expected to move in either direction to reflect the forces of supply and demand at any given time," read the statement in part.
In explaining the drastic gain of the shilling, the bankers credited the recent successful pricing of the USD 1.5 billion Eurobond which is noted to have boosted investor confidence in the Kenyan economy.
Kenyans' participation in bidding for the government infrastructure bonds which the government floated at Ksh70 billion was also attributed as a factor.
"Data from the Central Bank of Kenya (CBK) confirms that the Infrastructure bond received total bids worth Ksh288 billion, and CBK accepted Ksh240.9 billion with Ksh218 billion in competitive bids.
"Expectedly, the infrastructure bond elicited considerable foreign investor appetite, leading to the shilling rally, especially on the back of the sovereign’s successful Eurobond issuance that beat back quite convincingly earlier difficult risk concerns," the bankers added.
The shilling has been gaining against the dollar this week. On February 9, the dollar traded at 159.5 and fell to Ksh158.6.
On February 13, the exchange rate dropped to Ksh156.7 and later to Ksh153.2 on February 14.
Notably, the recent fall in the exchange rate could also be a result of the mass sale of the dollars as those who have been hoarding take advantage of the prices when they are still high.
The government also advised Kenyans to offload their dollars to avoid incurring risks.
“I want to encourage Kenyans if you’re holding any dollar because you fear the Eurobond, please note that now the risk of failure to settle the Eurobond is gone and so you need to get back to business sell your dollars and get back to business don’t do any speculation anymore,” Treasury Principal Secretary Chris Kiptoo stated.
