The Kenyan Shilling is currently on a steady decline against major currencies, and industry experts predict this downward trajectory will continue for most of 2024.
This fluctuation has sparked worries in the manufacturing industry, with the potential risk of Kenya losing its appeal for business if immediate corrective actions are not taken.
The Sanlam Investment Outlook for 2024 forecasts that forex availability will be a major hurdle this year.
Elements such as geopolitics, elections, and changes in fiscal and monetary policies are likely to significantly influence the economic scenario.
On a global scale, analysts predict an enhancement in economic conditions as the worldwide monetary policy becomes more lenient.
The Shilling’s depreciation will persist, though with lesser intensity compared to 2023.
“We foresee the shilling depreciating in 2024, but with less intensity than 2023, given the Central Bank of Kenya’s decision to raise interest rates and the projected decrease in US interest rates,” said Dan Gathogo, Sanlam’s Deputy Chief Investment Officer,
The Central Bank of Kenya’s move to hike interest rates and the anticipated fall in US interest rates are mentioned as factors that could potentially ease some of the pressure on the Shilling.
The Kenyan currency reached a record low of 160 against the US dollar on January 15, 2024, as per the official Central Bank of Kenya (CBK) exchange rate.
The Shilling’s value dropped from an average of Ksh.120 against the dollar in January 2023 to Ksh.150 by the end of October, and has since crossed the Ksh.160 mark in mid-January 2024.
However, a positive sentiment from foreign investors towards Kenyan equities is expected as the uncertainties surrounding Kenya’s repayment of its 2024 Eurobond diminish and global monetary policies become less stringent.
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