Kenya shilling finds relief in longest winning streak since 2021

Kenya’s embattled currency is on course for its longest streak of gains since May 2021.

The shilling strengthened against the dollar on Wednesday for a fourth straight session, paring its losses since the beginning of last year to 25%.

Local demand for dollars is subdued, while hard-currency inflows are bolstering the shilling, according to Nairobi-based NCBA Bank Kenya Plc.

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“We expect the volatility on the local currency to ease – albeit marginally – due to a narrowing balance of payments deficit, supported by stabilising dollar inflows from tourist arrivals, diaspora remittances and key export-earning sectors,” Nairobi-based AIB-AXYS Africa said in a note.

Rising external debt-service commitments, coupled with a ballooning import bill, continue to pose downside risks for the shilling, according to the brokerage.

The currency traded 0.4% higher at 160.60 against the dollar at 11:49 a.m. local time.

Kenya’s foreign-exchange reserves during the week ending January 25 rose to $7.02 billion from $6.81 billion the previous week, as the East African nation borrowed $210 million from the Trade & Development Bank and the International Monetary Fund approved a $685 million loan.

© 2024 Bloomberg

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