The Kenyan Shilling has ascended to Africa’s most robust currency, marking a significant 15-month peak in its valuation against the US dollar. This achievement comes from increased foreign exchange inflows, primarily fueled by a buoyant agricultural export sector.
Recently, the Kenyan Shilling strengthened significantly, reaching its highest value since March of the previous year. From a Shs161 per US dollar rate, it has impressively climbed to Shs128.66. This surge is largely attributed to an uptick in agricultural exports, which has enhanced dollar supplies in the nation, easing the pressure from importers demanding foreign currency.
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On June 14, 2024, the Central Bank of Kenya (CBK) adjusted its official rate to reflect the traded rates within the interbank market more accurately. This adjustment is a strategic move to align the official currency valuation with the prevailing market conditions, as CBK Governor Kamau Thugge noted. He highlighted that the shilling’s gains are partially driven by the central bank’s prudent monetary policies, spurring increased investment inflows.
A recent report by BusinessInsider further underscores the shilling’s strength, pointing to a 20% rise in remittances in the first four months of 2024, totaling N1.6 billion, up from $1.34 billion in the corresponding period last year.
Contrasting the shilling’s success, the Nigerian Naira has encountered significant setbacks, depreciating continuously against the US dollar over the past three weeks. The naira’s troubles are compounded by a foreign exchange scarcity, leading the Central Bank of Nigeria to cease its weekly forex allocations to Bureau de Change operators.
As of June 13, 2024, the naira’s value dipped further to N1,482 per dollar, a decline from N1,473 the previous day. Currency traders have observed fluctuations, with rates soaring as high as N1,490 and dipping to N1,390 per dollar. Despite a slight increase in forex turnover at the NAFEM, which reached $183.47 million, the naira remains under pressure across official and parallel markets.
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The Kenyan shilling’s ascendance to the top spot as Africa’s best-performing currency, as ranked by the World Bank earlier this April, marks a significant shift in regional financial dynamics. This comes after a 12-year period of gradual gains attributed to bolstered investor confidence and substantial inflows from a recent $2 billion Eurobond issuance.
