Kenya’s Shilling Emerges as Africa’s Strongest Currency: Reasons
In a recent report, the Kenyan Shilling has been identified by Business Insider as the top-performing currency in Africa, marking a remarkable 15-month growth streak. This achievement follows the currency’s rise to levels unseen since March 2023, currently trading at Ksh128 against the US Dollar.
The shilling’s upward trajectory began in February 2024, coinciding with the oversubscription of a $2 billion Eurobond, which bolstered investor confidence and contributed to its strengthened position.
This growth has been further fueled by increased foreign exchange inflows from tea and coffee exports, alongside a notable surge in diaspora remittances, reaching Ksh53.8 billion (USD 412.4M) by January 2024.
The Business Insider’s rating echoes similar recognition by the World Bank earlier this year, affirming the shilling’s resilience and positive economic indicators. Central Bank Governor Kamau Thugge, addressing the Monetary Policy Committee in June, projected stability for the shilling, foreseeing no significant fluctuations in the near term.
Factors Driving the Shilling’s Success
- Eurobond Oversubscription: The oversubscription of Kenya’s $2 billion Eurobond in February 2024 reignited investor confidence, prompting significant growth in the shilling’s value.
- Export Inflows: Increased foreign exchange earnings from tea and coffee exports have further supported the shilling’s ascent, contributing to its strengthened position in international markets.
- Diaspora Remittances: A substantial rise in diaspora remittances throughout 2024 has provided additional support to the shilling, helping it maintain its upward trajectory against major currencies.
Central Bank’s Outlook
Central Bank Governor Kamau Thugge, in a recent Monetary Policy Committee meeting, emphasized the shilling’s expected stability in the exchange market.
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“We anticipate the shilling to remain stable without significant weakening or strengthening in the coming months,” he remarked, highlighting the bank’s confidence in the currency’s current position.
By consistently outperforming other African currencies and maintaining strong economic fundamentals, the Kenyan Shilling continues to establish itself as a robust contender in the global financial landscape.
Kenya’s Shilling Emerges as Africa’s Strongest Currency: Reasons
