Kenyan shilling strengthens against EAC currencies in boost for export revenue
By Lucy Mumbi |
As of July 10, 2024, the exchange rates against the Kenyan shilling stood at 128.75 USD, 139.25 EUR, 164.76 GBP, and 0.80 JPY.
The Kenyan shilling has surged in value against East African Community (EAC) currencies, marking gains of up to 30 per cent across the region.
As of July 10, 2024, the exchange rates against the Kenyan shilling stood at 128.75 USD, 139.25 EUR, 164.76 GBP, and 0.80 JPY.
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The appreciation of the Kenyan shilling reverses a trend observed last year, providing a financial advantage to exporters selling goods to EAC countries.
Data from the Central Bank of Kenya (CBK) reveals that the shilling's value has notably risen over the past six months - by 29.9 per cent against the Tanzanian shilling, 27.7 per cent against the Rwandan franc, and 19.5 per cent against the Ugandan shilling.
Churchill Ogutu, a Mauritian economist at IC Asset Managers, noted that EAC investors will enjoy double benefits from both the currency valuation gains and the price appreciations seen on the Nairobi Securities Exchange (NSE).
“From a trade perspective, the strengthening of the shilling against peer currencies in the region may reduce the appeal of Kenyan export products to other EAC countries. On the other hand, it is beneficial to EAC investors who have invested locally, who will enjoy a double boom," he explained.
The surge in the Kenyan shilling's value against major global currencies, including an 18.1 per cent increase against the US dollar and a 17.4 per cent rise against the Pound Sterling since the beginning of the year, has been supported by the maturity of the Eurobond last month and attractive interest rates on government securities, which have reached highs of 18 per cent.
Despite these gains, the strengthened shilling has diminished the competitive edge for EAC importers of Kenyan goods compared to last year.
Kenya's primary export destinations within the EAC in the first quarter of this year were Uganda at Sh29.67 billion followed by Tanzania at Sh13.4 billion, and Rwanda at Sh8.54 billion.
Overall, Kenya's exports to EAC countries surpassed Sh300 billion last year, up from Sh226.48 billion the previous year, driven by increased exports and the inclusion of the Democratic Republic of Congo (DRC) in the trading bloc.
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