The Kenyan shilling has strengthened to its highest level in six months, reaching an exchange rate of 127.42 against the US dollar, as reported by the Central Bank of Kenya (CBK) on March 3, 2025.
This rally, marking a 1.4 percent gain from the previous week’s 129.23, is attributed to CBK’s interventions in the foreign exchange market.
The CBK has been actively buying dollars to bolster its reserves and manage market volatility, a shift from its earlier approach of limited intervention unless excessive fluctuations occurred.
Commercial banks reflected this trend, trading the shilling at 127.50/128.50 per dollar.
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The shilling’s appreciation is also supported by increased dollar inflows from agricultural exports, particularly tea, and diaspora remittances, which rose by 18 percent to $1.882 billion in the first five months of the fiscal year starting July 2024.
Additionally, Kenya’s foreign exchange reserves grew by $345 million to $8.185 billion, providing 4.23 months of import cover, further stabilizing the currency.
Analysts suggest the CBK may continue purchasing dollars to maintain reserves above the four-month import cover threshold, potentially sustaining the shilling’s strength into the first half of 2025, though global dollar strength could pose future challenges.
