Kenya Shilling is on a winning streak and gained 4.2% in value against the dollar as of Tuesday.
It has deviated from its current downward trajectory and is trading at a high of 156 units against the dollar.
The currency fell by more than 22% in the 12 months ending in December 2023.
It almost tripled its depreciation rate from 8.3% the year prior.
It depreciated by 2.4% against the US dollar in the first two weeks of the new year, going from 156.40 units to 160.23.
The currency has been among the poorest performers in currency valuation since the advent coronavirus.
A Bloomberg report shows Kenya experienced the worst currency nosedive in over three decades, alongside Nigeria – which has performed abysmally on the continent.
The gain is also attributable to the country’s borrowing more from development banks.
The New Bond Markets
It’s backed by Kenya’s return to the international bond market, which implies an increase in financing sources.
Kenya has signed an MoU with Nippon Export and Investment Insurance (NEXI) to issue a Samurai Bond worth $500 million.
Part of the Bond will be used to refinance the maturing $2 billion eurobond.
What Experts Are Saying About Shilling Gain
However, IC Asset Managers economist Churchill Ogutu cautioned that this was “not a clear sign of a lasting trend.” when he spoke to Bloomberg.
He said Kenya’s exports, such as tea and vegetables, needed to prove their competitiveness in the long run.
What A Gaining Currency Mean
Importers are the main beneficiaries of the stronger currency in the short term – said Ogutu.
A stronger currency could also reduce the pressure on the government budget.
If the local currency makes a rebound from the depreciation as the current trend suggests, it spells a sigh of relief for importers that pay foreign institutions as well as hard currency borrowers who have taken forex losses hit by the sustained weakening of the shilling