Kenya’s beleaguered currency, the shilling, is set to achieve its lengthiest winning streak since May 2021 as the shilling recorded gained against the dollar for the fourth consecutive session on Wednesday.
This positive development has narrowed the shilling’s losses since the beginning of last year to 25%.
“Local demand for dollars is subdued, while hard-currency inflows are bolstering the shilling,” noted financial experts.
The volatility on the local currency is also expected to ease marginally due to a narrowing balance of payments deficit supported by stabilizing dollar inflows from various sources.
The ongoing strength in the shilling is attributed to a combination of factors, including stabilized dollar inflows from tourist arrivals, diaspora remittances, and key export-earning sectors, which are expected to contribute to a gradual easing of volatility in the local currency.
However, challenges persist as rising external debt service commitments, coupled with an expanding import bill, continue to present downside risks for the shilling.
Despite these challenges, the narrowing balance of payments deficit is anticipated to provide some relief, especially for importers.
As of Wednesday at 11:49 am EAT, the shilling traded 0.4% higher at 160.60 against the dollar, reflecting the positive trend in its recent performance.
