The Kenyan Shilling has strengthened further against the United States Dollar, trading at 128.25/129.25 on Wednesday, September 4, compared to Tuesday’s closing rate of 128.50/129.50. This positive shift comes just two days after experts predicted gains for the local currency.
According to Reuters, the strengthening of the Shilling is attributed to increased dollar inflows, particularly from the agricultural and tourism sectors. “There’s been some good foreign exchange demand, but offshore flows are coming for the infrastructure bond,” a trader noted, highlighting the impact of recent government initiatives.
Earlier in the week, analysts indicated that the Central Bank’s planned interventions in exchange rates would bolster the Shilling. The local currency has shown resilience over the past eight months, despite concerns following credit rating downgrades by agencies like Moody’s and S&P.
Additionally, the issuance of infrastructure bonds has been projected to positively influence the Shilling, as investors convert their dollars to purchase tax-free government securities. However, the currency’s stability has been challenged by muted foreign currency demand from the manufacturing sector and fuel importers.
Despite recent anti-government demonstrations that raised concerns about economic stability, traders remain confident in the forex market. “It’s very stable. Demand and supply seem to be evenly matched,” the trader added, reflecting a balanced market environment. The Central Bank’s strategy to purchase dollars has also contributed to maintaining the Shilling’s stability amid volatility.
