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Wednesday March 20, 2024
by PERPETUA ETYANG
A currency is classified as strong when it is worth more than another country’s currency.
Kenyan currency notes. Image: FILE/ ENOS TECHE
The Kenyan Shilling has continued to significantly gain against the dollar in the past weeks.
Kenyans are staring at a bright economic recovery if the Shilling maintains the gain.
As of Tuesday, March 19, the Kenyan Shilling was being exchanged at 133.99 per US dollar according to the Central Bank of Kenya.
Other traders are selling the dollar from as low as Sh132 against the dollar.
A currency is classified as strong when it is worth more than another country’s currency.
A strong Shilling is a boost for people who travel abroad, and people who like imported goods, because they will be cheaper.
However, it can be bad for domestic companies as their products will be expensive overseas.
The US dollar had risen from an average exchange rate of Sh125 against the shilling in the first quarter of 2023 to Sh162 posted in January 2024.
On January 15, the shilling officially crossed 160 unit points against the US dollar, the lowest level on record.
The Central Bank of Kenya blamed the depreciation of the shilling on the $2 billion (Sh300 billion) Eurobond.
The depreciation made imports more expensive while at the same time pushing up Kenya’s debt.
However, in February, the country successfully issued a new Eurobond worth $1.5 billion (Sh238 billion) to buy back the inaugural one due on June 24.
The National Treasury said the new loan is divided into three instalments and has a weight average life of six years and is expected to mature in 2031.
The bond is priced at 10.37 per cent, the highest rate an African state has ever offered.
Last month, National Treasury Principal Secretary Chris Kiptoo said that Kenyans hoarding the dollar should take advantage of the current window to sell off their dollar or risk losing them even as he remains bullish that the shilling will continue to rally against the dollar.
“I want to encourage Kenyans, if you’re holding any dollar because you fear the Eurobond, please note that now the risk of failure to settle the Eurobond is gone and so you need to get back to business sell your dollars and get back to business don’t do any speculation anymore,” he added.
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