The Kenya shilling held steady against the US Dollar, opening Monday at 159.6 units, a slight improvement from its closing position of 159.9 units last Friday, representing a 0.18 percent gain in value.
However, despite these recent gains, the shilling has experienced a significant drop in valuation over the past year.
On a year-to-date basis, the shilling has depreciated by 1.8% against the dollar.
This adds to the substantial 26.8% depreciation recorded in 2023, raising concerns about the currency’s stability.
It comes when Kenya’s foreign exchange reserve has posted a marginal increase.
As of January 12, the reserve stood at US$6.829 billion, up from US$6.775 billion the previous week.
This equates to 3.65 months of import cover, a slight increase from 3.62 months the previous week.
Despite this increase, the reserve remains below the statutory requirement of maintaining at least 4.0 months of import cover.
The performance of the Kenya shilling will continue to be a key area of focus for policymakers and investors alike.
It will be supported by key indicators, among them the diaspora remittances which stands at a cumulative $3,817.4 million as of November 2023, 4.0% higher than the $3,670.6 million recorded over the same period in 2022, which has continued to cushion the shilling against further depreciation.
In the November 2023 diaspora remittances figures, North America remained the largest source of remittances to Kenya accounting for 57.2%.
