NAIROBI, Kenya, Jan 16 – In a show of resilience, the Kenya shilling strengthened steadily throughout its trading session yesterday, despite the suspected terror attack at 14 Riverside Drive that left 14 people dead.
According to Analysts at Commercial Bank of Africa, the local currency market witnessed a slight uptick of activity with the home unit gaining through the trading session on the back of amplified inflows.
The shilling, which has remained largely unchanged since the start of the year is currently trading at 101.65 against 101.85 shillings to the US dollar.
This is even as analysts expect the shilling to remain flow driven.
The Kenya Shilling exchange rate remained broadly stable and competitive against major international currencies in 2018.
Against the dollar, the exchange rate has been relatively less volatile exchanging at Sh102.3 in December 2018 from Sh103.1 in December 2017.
Against the Euro and the Sterling pound, the Shilling also strengthened to Sh116.4 and Sh129.7 in December 2018 from Sh122.0 and Sh138.2 in December 2017, respectively.
“The Kenya Shilling exchange rate has continued to display relatively less volatility, compared to most sub – Saharan Currencies. This stability reflects strong inflows from tea and horticulture exports, resilient diaspora remittances and improved receipts from services particularly tourism,” Treasury said in the Draft 2019 Budget Policy Statement.
Foreign exchange reserves have increased from around 3 months of import cover in 2003 to 5.6 month of import cover in 2018 which is above the statutory requirement of 4.0 months of import cover and thus remains adequate to safeguard against exogenous shocks such as terror attacks.
The official foreign exchange reserves held by the Central Bank improved to US$ 8,554 million (5.6 months of import cover) in October 2018 compared with US$ 7,574 million (5.1 months of import cover) in October 2017.
By end December 2018, the usable official reserves stood at US$ 8,001 million or 5.2 months of import cover.
Commercial banks holdings was at US$ 3,114 million in 2018 from US$ 2,357 million in 2017.