Why the shilling's meteoric gain against US dollar is not a mystery

Kenyan currencies overlaid on top of dollars. [File, Standard]

The current game in town is guessing the next level of the shilling, which has appreciated fast and furiously. It's made more exciting by the Central Bank of Kenya (CBK) not giving the targeted exchange rate.

Economists, pseudo-economists, prophets, and naysayers are all trying to explain the sudden appreciation. The beauty of all this is that, in the fullness of time, the truth shall emerge when more information is made available, most likely in drips. Let me try to explain the surge using economics, psychology, and speculation.

First, the surge in the Kenyan shilling does not seem to follow the fundamentals, the laws of supply and demand. There has been no significant inflow of dollars in the market, and there has been no major global event like the US cutting interest rates.