The value of the Kenyan shilling yesterday appreciated to levels last seen in July 2015. At some point, it exchanged for 99.75 to 1 US dollar. The rise in value is attributed to low demand for the dollar by importers. A currency trader with a Kenyan commercial bank told Reuters, “The shilling is strengthening because flows are not getting absorbed by demand.”
In 2018, remittances from Kenyans abroad were at their highest level and foreign income from the tourism sector went up. The high supply of foreign currency ensured that the shilling remained strong.
While a strong shilling is beneficial to importers and government’s debt repayment plan, it hurts Kenyan exporters as the price of their goods and services go up.
Last week, Citi reported that the Kenyan shilling is overvalued and project that it will end the year at 108.9 against the US dollar.
