The Kenyan currency has been gaining against the US dollar for five days in a row as of Friday, February 2, 2024, the longest period of consecutive increases since December 2020.
Analysis shows the currency has recovered 1.8% against the dollar in this period and has also received an impetus from the central bank of Kenya (CBK) which also injected Ksh.5 billion into the interbank market on Thursday through seven-day reverse repos.
The gain is also attributable to the country’s borrowing more from development banks.
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. He also said that importers would be the main beneficiaries of the stronger currency in the short term.
According to the KNBS, Kenya imported goods worth Ksh.259.1 billion ($1.61 billion) from January to November, 2023.
More than half of the imports were industrial supplies, fuel and lubricants.
The stronger currency could also reduce the pressure on the government budget.
The data from the National Treasury shows 67% of Kenya’s foreign debt, which stood at Ksh.5.45 trillion at the end of June, was denominated in dollars.