The US Dollar is gradually regaining its glory in the local market, ending the week at 1% against the Kenya Shilling.
It happenes three days after Kenya paid back $1.5 billion of the inaugural $2 billion 2014 Eurobond.
Speaking on February 21 in Naivasha at a four-day Cabinet retreat, President William Ruto said the successful buyback had boosted the local currency.
“Investor confidence has been significantly enhanced, resulting in the appreciation of the shilling against the US dollar, from Ksh.162 to Ksh.142,” said Ruto.
Data by the Central Bank of Kenya (CBK) shows the shilling exchanged at 144.0 units against the dollar on Friday., February 23, 2024.
It beats all the gain the shilling has made in the fast two weeks of February. It once retailed at 142.9 units for five consecutive days.
Also Read: US Dollar Loses 11% in Value Against Shilling Under a Month
At the beginning of the year, the Kenyan currency was among the worst-performing in Africa, trailing behind the Naira.
Eurobond Issuance Boosts Shilling
The shift occurred in the context of a $1.5 billion eurobond issuance, which garnered strong demand from foreign investors.
This move eased concerns about the repayment of a eurobond due in June.
Foreign investors purchased the local currency to cover Ksh.241 billion ($1.6 billion) of local infrastructure debt issued on February 14.
Markets Dynamics Now Changing Against Investors
Market dynamics are once again asserting their influence.
While the greenback gain spells good news for dollar holders, it poses challenges for importers.
The stronger dollar means higher import costs, impacting businesses across various sectors.
Investments that previously favored the shilling may now shift back toward dollar-denominated assets.
Similarly, consumption patterns could adjust, affecting industries and services.
The gradual reversal of gains could be a double-edged sword, with winners and losers emerging in the market.
