The Kenyan shilling has weakened considerably against the British pound and the euro, losing its winning streak for the first time in a year against the two major global currencies.
As of Tuesday, March 25, figures from commercial banks showed the shilling trading at Ksh167.1 against the pound, with data from the Central Bank of Kenya (CBK) indicating that the shilling depreciated by 2.40 per cent against the pound in March this year.
Local banks also quoted the shilling trading at Ksh139.7 against the euro, with data from the apex bank showing that the local unit had lost 2.97 per cent of its value against the leading currency.
It is worth noting that trading activities in European markets are conducted in euros and pounds. However, the weakening of the shilling signals a worrying trend for Kenyan importers.
Kenya primarily exports flowers, coffee, and tea to Europe, with the Netherlands and the United Kingdom remaining the country’s top export destinations.
According to reports from the Central Bank, in 2024, Kenya exported horticultural products worth Ksh137 billion to Europe, with a significant portion of the earnings generated from tea exports.
The shilling for a better part of last year remained resilient against the two European currencies, following the government’s decision to implement favourable monetary policies.
While the local currency has lost its streak against the euro and pound, the shilling has remained stable against the United States dollar, which is the most commonly used currency on the international front.
As of Wednesday, March 26, data from the London Stock Exchange Group (LSEG) quoted the shilling trading at Ksh129.10 against the dollar, the same level as Tuesday.
According to Reuters, the local currency was stable against the dollar due to foreign currency inflows from diaspora remittances and tea exports.
The stability of the shilling against the greenback could be attributed to the government's decision to buy back the Ksh310 billon eurobond that expired in June 2024.
Other factors include the oversubscription of the infrastructure bonds issued by the Central Bank of Kenya in February last year and earnings from the tea and coffee exports.
