The Kenyan Shilling weakened slightly against a stronger US Dollar on Thursday as demand for the foreign currency increased globally following President Trump’s victory last week.
- The Central Bank of Kenya (CBK) quoted the shilling at 129.3507 on Thursday, a 3-month low, from 129.25 on Wednesday as dollar demand outweighed its supply in the domestic market.
- The dollar index, which tracks the US dollar against a basket of currencies, touched a one year high on Thursday, currently trading above the 106.5 mark.
- CBK is expected to deliver a monetary policy decision at its December meeting after the annual inflation rate dropped below 3% for the first time in 12 years, reaching 2.7% in October slightly above the preferred 2.5% midpoint of CBK’s target range.
“Because of the dollar being attractive we are now seeing investors starting to buy dollars to repatriate them back to the U.S. markets,” a trader told Reuters on Wednesday.
The Kenyan shilling has maintained stability amid other world currencies experiencing high volatility since last week pointing to CBK’s intervention to curb volatility by purchasing foreign currency. Kenya currently has US$9.3 billion in forex reserves, a three-year high that’s enough to cover 4.8 months of imports, above the required 4 months threshold.
The US Dollar extended gains, rippling through the global markets, weighing on major currencies including the Euro, Japanese Yen, Chinese Yuan, British Pound, Mexican Peso, South African Rand, Kenyan Shilling and other currencies.
Trump’s incoming administration seeks to impose higher trade tariffs and tighten immigration conditions, likely to prompt inflation – which has been easing towards Fed targets – potentially slowing the Federal Reserve’s efforts to cut interest rates. Higher tariffs will depress US demand for foreign goods and services hence reducing the trade deficit in turn fueling inflation.
The South African Rand extended losses to hit 3-month lows, now trading at 18.25 against the greenback. The US dollar climbed above 155 yen for the first time since July with the Euro weakening to 2023 levels. The Sterling pound edged lower to a 3 months low,now trading at US$1.26920 against the dollar.
