This archive report was first published on 21 November 2019.
On November 21, 2019, the Kenyan shilling marked its sixth consecutive day of appreciation against the US dollar, reaching an average of 101.40, according to Reuters data.
The shilling's surge was attributed to healthy inflows into the banking stocks and government securities, as well as the removal of the interest rate cap, which has boosted foreign interest in government papers.
Standard Investment Bank's head of global markets division, Nahashon Mungai, noted that the record diaspora remittances and the Central Bank of Kenya's aggressive mop-up of excess liquidity through open market operations have contributed to the rising local currency.
"Inflows into banking stocks following interest rate cap repeal, record diaspora remittances, foreign interest in government papers including IFB Oct and the 10-year November, muted demand, with no heavy importation on infrastructure projects," Mr Mungai said.
International crude prices have also fallen, with orders for delivery in September next year being as low as $54 per barrel compared to nearly $60 currently.
However, Mr Mungai warned that the local unit faced immediate threats of depreciation due to factors such as the de-risking of capital in the international markets, potentially disruptive politics, and the rising debt burden.
