Kenyan shilling reverses gaining streak on prolonged demos

The Gen Z-led protests calling for accountability in government have clocked one month, a trend that has now triggered a tremor in the country's investor confidence.

This is envisaged in the fresh slump of the Kenyan shilling which crossed the 130 mark on Friday last week, after the past few months of fair stabilisation from the historic low of 161.

The Central Bank of Kenya (CBK) quoted the shilling at 130.88 on July 23, a depreciation stemming from the previous weeks when it exchanged at an average of 128 against the greenback.

The shilling had weakened to a low of 161 in January this year, on the back of an increased debt burden and diminishing foreign investor confidence.

However, the local currency began seeing the light sometime in February, thanks to the partial buyback plan on the 2024 $2 billion Eurobond.

In just two months to the end of March, the local currency had strengthened by 30 unit values, a 19 per cent gain.

Investor confidence

Experts across the country exhibited that the buyback did enough to boost the country's investor confidence, thus more dollars were pumped into the country, increasing the supply and exchange, and making the shilling stronger.

Notably during the first two weeks of the demos, the shilling remained fairly stable, keeping track of its recovery journey.

During that period, the local currency exchanged against the US dollar at an average of 129, tarnishing the fears of potential weakening on account that some external investors would pull out their shares of investment in platforms such as the stock market, depriving Kenya of dollar supply.

The fear could now be manifesting in the country as the shilling starts dwindling afresh.

A sustained gaining streak of the shilling against the dollar is good news for the consumers in the country, as it translates to relief from costly products.

Kenya is a net importer, and importers have been feeling the pinch of the weak shilling, spending more on goods brought in, and passing on the burden to consumers.

However, a depreciation of the local currency is not good news to both parties.