Kenyan importers are benefiting as the Kenyan shilling strengthens against the US dollar for the fifth consecutive day, reaching a historic high since 2021.
The shilling’s recent 1.8% gain is a positive turnaround from its 21% fall in December 2023, providing relief for importers who can now spend less on imports.
The currency’s appreciation is attributed to increased tourism and diaspora remittances. Kenya’s tourism industry is expected to grow in 2024 after generating Ksh 333 billion in 2023.
Additionally, diaspora remittances have risen, with the government actively encouraging more Kenyans to work abroad to boost remittances.
The stability of the shilling has also led to increased export earnings. While cautioning against premature trend predictions, economists acknowledge the short-term benefits for importers.
The CBK emphasized the stability of foreign exchange reserves, meeting the statutory requirement of at least four months of import cover. Internationally, the US economy grew by 3.3% in Q4 2023, and the US dollar index strengthened slightly.
Rising oil prices were attributed to faster-than-expected US growth and geopolitical risks in the Middle East, with Murban oil reaching $80.72 (Ksh 12,960) per barrel on January 25.