The Kenyan shilling has become the best-performing currency in the world in less than three months.
This is after it gained by 20 per cent, beating by far the world’s second-best performer, the Sri Lankan rupee which has strengthened by 6.1 per cent.
As of Thursday, March 14, the shilling gained by 1.4 per cent to trade at 136.79 units against the dollar, by this, it marked its 10th consecutive day in gains.
This longest streak of gain has mainly been attributed to the issuance of the new Eurobond by the government which was valued at USD1.5 billion (Ksh234 billion). The money from the new Eurobond was used in buying back part of the Eurobond maturing in June this year.
While defending the government's move to issue the new Eurobond in February this year, Treasury Principal Secretary Chris Kiptoo stated the securities attracted investors who made more than USD6 billion in offers.
Another contributing factor is the oversubscription of the Treasury Bonds including the infrastructure bonds worth Ksh70 billion issued by the Central Bank of Kenya in January this year.
The National Treasury raised Ksh241 billion from foreign investors who purchased the infrastructure bonds.
The oversubscription in the government bonds was linked to investors’ confidence in Kenya’s economic and debt management strategies.
Similarly, an increase in the diaspora remittance by Kenyans living in the diaspora contributed to the shilling gain.
“The shilling’s appreciation can largely be ascribed to upsized packages from both the International Monetary Fund and World Bank, as well as the issuance of a new Eurobond,” noted an economist.
While commenting on the shilling strengthening against the green buck in February, PS Chris Kiptoo warned that Kenyans hoarding dollars risk incurring more losses as he prospected further stability of the local currency.
"I want to encourage Kenyans that the risk of failure to settle for the Eurobond is gone. Sell your dollars and get back to business. Don't do any speculation anymore,” Kiptoo remarked.
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