Kenya shilling strong despite election turbulence

The Kenyan shilling has been steady most of this year against the greenback, shrugging off uncertainty from a prolonged electioneering period. FILE GRAPHIC | NMG 

In Summary

• The shilling was trading at 103.00/20 to the dollar — the highest since September 15.
• Before the ruling, the shilling had weakened as cautious foreign investors and companies waited for the presidential petitions hearings against President Kenyatta’s win in a fresh vote held last month.
• The Kenyan shilling has been steady most of this year against the greenback, shrugging off uncertainty from a prolonged electioneering period.

By MARYANNE GICOBI
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The Kenya shilling this past week hit a two-month high, after the country’s Supreme Court threw out two petitions challenging President Uhuru Kenyatta’s re-election.

The shilling was trading at 103.00/20 to the dollar — the highest since September 15.

Before the ruling, the shilling had weakened as cautious foreign investors and companies waited for the presidential petitions hearings against President Kenyatta’s win in a fresh vote held last month.

The shilling was 103.80/90 at the beginning of the week.

The Kenyan shilling has been steady most of this year against the greenback, shrugging off uncertainty from a prolonged electioneering period.
The Central Bank of Kenya has increasingly intervened in the market, through the sale of dollars to banks and withdrawing liquidity amid depreciation pressure on the shilling.

Governor Patrick Njoroge cautioned dealers against speculating on the Kenyan shilling with regard to the general election.

Ripple effect

The Kenyan election also had a ripple effect on regional currencies, with analysts in Uganda saying the political developments were partly responsible for the depreciation of their currency. Most Ugandan imports pass through the port of Mombasa and any uncertainties in Kenya affects them directly.

The Ugandan shilling was however firm mid last week, attributed to hard currency inflows from remittances by Ugandans living abroad and commodity exports. Commercial banks quoted the shilling at 3,630/40 to the dollar.

The Kenyan shilling was stable against the dollar due to offshore investors buying government debt. Recent data from the Central Bank showed an increase in remittances from Kenyans living abroad to $176 million.

Dr Njoroge said that September inflows from the diaspora have played a major role in supporting the shilling, which has been relatively stable, depreciating a marginal 1.14 per cent against the dollar this year.