Shilling performance in 2018

Kenyan coins and notes. [Photo: Reuters]

In January, the Kenyan shilling traded against the dollar at 103.15/25, facing a month low due to importer demands according to Refinitiv data.

The Kenyan shilling appreciated against the dollar supported by inflows from offshore investors and banks cutting dollar positions amid dwindling importer demand, on July.

Commercial banks quoted the shilling at 100.65/85 per dollar.

In October, the Kenyan shilling remained stable due to thin importer and corporate dollar demand meeting with some inflows from the horticulture and tourism sectors. Commercial banks quoted the shilling at 100.90/101.00 per dollar.

In November, the Kenyan shilling firmed against the dollar with the Central Bank of Kenya denying claims by the International Monetary Fund that the Kenyan shilling was overvalued.

CBK Governor Patrick Njoroge termed IMF’s assertions that the shilling was overpriced by up to 18 per cent in a report released in October as “erroneous”.

Dr Njoroge said all tested models had shown that the margin of error could only stretch to five per cent.

IMF had said that the Kenyan shilling risks being classified as “managed” rather than operating on demand and supply.

Commercial banks quoted the shilling at 101.70/90 per dollar, compared with 101.60/80 at November 1, close due to inflows from investors interested in buying government debt.

In mid-November, Kenya's shilling weakened to a near 10-month low due to importer demand, especially from oil companies, traders said. At the time, commercial banks quoted the shilling at 102.95/103.15 per dollar.

On November 16, Kenya’s foreign debt grew by Sh2.5 billion even without borrowing additional cent. The shilling declined six straight days of trading.

This is after shilling depreciated 0.1 per cent to cross the 103 mark expanding the country’s foreign debt by Sh2.5 trillion.

This comes as oil prices pushed up the cost of imports.

Traders would have to need more shillings to buy dollars for imports, piling pressure on Central Bank of Kenya (CBK) reserves and local lenders.

For months now, the shilling has exchanged at around 100 units against the dollar, despite shocks of IMF facility withdrawal and raising of the United States Federal rates by 0.25 eight per cent to 2.25 per cent.