Rédaction Africa Links 24 with Kenyans.co.ke
Published on 2024-02-18 20:46:48
The Kenya Association of Bankers (KBA) has pointed out that the recent strengthening of the Kenyan Shilling can be attributed to the successful floatation and pricing of the Ksh212.3 billion ($1.5 Eurobond) maturing in 2031 that Kenya sold last week. This development is seen as a positive indicator of investors’ confidence in Kenya’s economy. The successful pricing of the Eurobond at a 10.375 per cent interest rate, which is a record high for an African state issuing a bond, is also noted as a factor behind the Kenyan Shilling’s recent rally. Furthermore, the Eurobond has contributed to increasing the foreign exchange reserves in the economy, which has served to strengthen the Shilling.
In addition to the Eurobond, the successful sale of an infrastructure bond has also been identified as a contributing factor to the growth of the Kenyan Shilling against the US Dollar. The government has revealed that the infrastructure bond was oversubscribed, garnering Ksh241 billion ($1.58 Billion) – about three times more than Treasury officials were expecting.
These factors combined have positively impacted the Shilling, which is currently trading at Ksh141, down from Ksh160 two weeks ago. However, reports by Reuters indicate that the Central Bank of Kenya (CBK) intervened to purchase dollars from traders to curb the Shilling’s volatility. This move was made in response to Kenyans rushing to sell dollars owing to the Shilling’s resurgence, with the Central Bank purchasing them to stabilize the economy.
Despite the Shilling showing signs of recovery, economist Churchill Ogutu has warned that Kenyans should not expect the resurgence to be permanent. According to Ogutu, while the influx of money and minimal import demand may temporarily support the Shilling, it is not a guarantee of long-term stability.
The successful pricing of the Eurobond and the oversubscription of the infrastructure bond have highlighted growing confidence in Kenya’s macro-economic performance and outlook. These developments have had a positive impact on the Kenyan Shilling, boosting its value against the US Dollar.
It is important to note that the strengthening of the Kenyan Shilling has been made possible by a combination of factors including successful bond sales, increased foreign exchange reserves, and intervention by the Central Bank to stabilize the currency. As the economy continues to evolve, it will be important to closely monitor these developments and their impact on the financial stability of Kenya.
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