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| President Ruto of the Republic of Kenya |
Kenya shilling has continued the positive trend against the US dollar in the month of May. A photo collage showing US dollar bills, Kenya’s President William Ruto, and the legal tender for the Kenyan currency. In the previous CBK bulletin released on May 2, the Kenya shilling had ended the week on a strong note after a period of depreciation against the United States dollar, marking a reversal from its weakening trend that had started mid-April. READ ALSO Asian markets build on rally as US jobs data boost rate cut hopes Speaking to TUKO.co.ke on factors that may be propelling the recent appreciation of the Kenya shilling, Joan Ogara, a Forex market and personal finance expert, said: “The truth of the matter is that the demand for dollars has not declined. Sceptics are speculating a further depreciation and are still hoarding, while others are taking advantage of the current appreciation to buy dollars. In order to make a sound financial decision of whether to buy or sell, investors must not be swayed by speculatory market sentiments but rather be grounded on fundamental analysis.” How is Kenya shilling performing On Monday, May 6, the shilling started the week on a strong note, with various forex markets reporting that the Kenya shilling was gaining significantly against the US dollar. A line graph showing the Kenya shilling rates against the US dollar for the last 30 days. Source: Xe Currency Data API. On Wednesday, May 8, TUKO.co.ke established that the shilling was still appreciating with exchange rates at around KSh 131. The exchange rates in various forex bureaus were even lower, with the Satelite Forex Bureau speculating that the Kenyan shilling was the best-performing currency. What is happening to Kenya shilling VS US dollar Ogara explained that although the influx of US dollars in the economy following the Euro Bond issuance in February contributed to the appreciation of the Kenya shilling, other factors have sustained it. She explained that market speculators believe that if the Eurobond is the only factor behind the shillings’ appreciation, then these gains will remain temporary. This being the only reason for the appreciation, it is highly speculated that it is only a temporary move. “Incidentally, emotional market sentiments have also driven many dollar hoarders to sell their reserves out of panic that the KSh appreciation may be long-term, and they may lose the value of their money. In my opinion, it’s too early to make a significant financial move because the market is still too volatile. Other economic factors that influence the exchange rate must also be critically considered. If these economic factors that affect the exchange rate are not checked, this could confirm our worst fears that this is a temporary scenario, Egara explained in an exclusive interview with TUKO.co.ke.
by Elijah Ntongai