The Kenya shilling on Tuesday, November 26, gained against the US dollar, even as dollar inflows from remittances matched the rising importer demand.
The shilling traded at 129.00/130.00 at 11:03 am, according to LSEG data from Reuters, compared to the Central Bank of Kenya’s (CBK) weekend closing rates of 129.57 on November 22. The shilling increased by 0.57 cents against the dollar, despite the dollar’s surge since President-elect Donald Trump won the US elections earlier this month.
However, data from the CBK shows that the shilling closed the day Monday, November 25, trading at 129.57.
The remittances kept up a good stead after reaching an all-year high in October. The CBK revealed that remittances for that month totalled $437.2 million (about Ksh56.3 billion at current exchange rates), marking an $18.7 million (about Ksh 2.4 billion in the current exchange rate) increase from September.
Former CBK Governor Patrick Njoroge holding Kenyan Shilling notes.
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CBK
Further, the CBK, in its weekly bulletin published on Friday, November 15, announced that the cumulative inflows for the 12 months to October 2024 increased by 15.3 per cent to Ksh623 billion ($4.8 billion) compared to Ksh532 billion ($4.1 billion) in the same period last year.
According to CBK, the United States was the largest source of diaspora remittances to Kenya, accounting for 53.7 per cent of the contributions channelled into the country in October 2024.
The regulator, in its announcement, revealed that the remittance inflows boosted the country’s current account and stabilised the foreign exchange market.
A current account represents the country’s imports and exports of goods and services, payments made to foreign investors, and transfers such as foreign aid.
The shilling rose in the wake of the dollar rising after President-elect Donald Trump’s pledge to impose tariffs on imports coming in from Mexico, Canada, and China as well as Europe.
Trump vowed to impose a 25 per cent tariff on imports from Mexico and Canada on top of imposing a ten per cent additional tariff above all existing tariffs on Chinese products entering the US.
Moreover, the shilling’s latest trajectory comes barely two weeks after it depreciated against the US currency due to an increase in the demand for the dollar across multiple sectors.
“We’ve been seeing the dollar appreciate against all currencies globally, including the shilling. Because of the dollar being attractive, we are now seeing investors starting to buy dollars to repatriate them back to the US markets,” noted forex experts.
Despite that slip, the local currency remains the best-performing currency globally for the tenth consecutive month this year. This is after the government’s decision to repay the Ksh310 billion Eurobond that matured in June this year.
Kenya Shilling notes
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African Business