Kenyan shilling appreciates significantly against the dollar

The Kenyan shilling has in the last couple of days significantly strengthened against the American dollar, posting the strongest single-day gain against the US dollar in 12 years.

The latest development has seen the shilling appreciate for 11 straight days to trade below Ksh153.75 at some commercial banks. Most banks, including Equity, KCB and Stanbic are today buying one dollar for Sh135.8 and selling between  Sh140 – Sh145.

On Tuesday, the CBK had quoted the local unit at Ksh156.7 against the dollar.

The almost overnight appreciation of the Kenyan currency against the USD comes after the state got $1.5 billion to repay the previous Eurobond that matures on June 24, 2024.

The buyback of part of the Eurobond has eased fears among investors, attracting investment into the country.

Last Wednesday, Central Bank governor  Kamau Thugge said that the stabilization of the local currency had gained momentum.

“The Kenyan shilling has been stable for the last few days and as CBK we expect this stability to continue because we have taken action to raise the Central Bank Rate higher from 12.5 per cent to 13 per cent,” Thugge said.

The record appreciation of the shilling is set to lower import costs in local currency terms as importers are required to part with less for the same volume of goods ordered.

For the government, a stronger shilling will lower debt service costs, with the Treasury equating the movement of the currency by a single unit to impact debt service costs by Ksh40 billion.