Shilling Gains Against The Dollar

Kevin Namunwa | Aug 3, 2020

After hitting a record low two weeks ago, the shilling has gained against the dollar. The pressure that had seen it hit the record low of 108.03 units was eased making it gain 1.42 units.

On Friday, the shilling opened averaging at 106.61 against the dollar, extending the gains that followed the record low seen on July 23. The current exchange level is however still 5.2% in the negative in the year-to-date, given that the shilling opened the year averaging 101.34 units to the dollar.

Currency traders said the end-month dollar demands from merchandise and oil importers had cooled off after two weeks of raising their hard currency stock levels to match demand after the government started phased reopening of the economy.

The wake of global pandemic had immense effect in the global economy and the Kenyan shilling was not spared.

The shilling came under pressure after Kenya reported its first case of Covid-19 on March.

The pressure piled on the shilling up until July 6 when President Uhuru Kenyatta opened up Nairobi, Mombasa and Mandera counties and announced resumption of air transport. For the first time in months, the Kenyan economy breathed and the pressure on the shilling was eased.

The Central Bank of Kenya (CBK) said that its forex reserves of $9.35 billion is adequate to keep the shilling growing against the dollar.

CBK Governor Patrick Njoroge said last week in a post-Monetary Policy Meeting that when the performance of the shilling and other currencies is weighed against the dollar, “we are closer to the middle.”

“This is what the market is saying and all we want to do is to minimise volatility,” said Dr Njoroge.

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