The US dollar remained below the Ksh130 mark against the Kenya shilling on Monday, extending a trend that has persisted for months despite rising global oil prices and renewed uncertainty in international markets.
Central Bank of Kenya (CBK) data showed the shilling traded at KSh129.49 against the dollar on September 14, compared to KSh129.45 on September 11.
The latest rate also remained below the Ksh129.48 recorded on September 3.
The performance comes at a time when higher crude oil prices would ordinarily increase demand for dollars from importers and put pressure on the local currency.
Strong Reserves Support Kenya Shilling
The shilling’s resilience comes as the Central Bank of Kenya reported that foreign exchange reserves stood at $15.25 billion as of September 10, equivalent to 6.3 months of import cover.
The reserves remain above the statutory requirement of at least four months.
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The regulator also said the shilling remained stable against major international and regional currencies during the week ending September 10.
The local currency also strengthened against the British pound, which traded at Ksh175.07 on September 14 compared to KSh175.19 during the week ending September 10.
However, the shilling weakened slightly against the euro, with the exchange rate moving to Ksh150.25 from the previous week’s average of Ksh150.22.
The Japanese yen posted one of the biggest shifts among major currencies tracked by the CBK, with 100 yen trading at Ksh84.34 on Monday, up from a weekly average of Ksh83.66 in the week ending September 10.
The Kenya shilling exchanged at 29.84 units against the Ugandan shilling on Monday, while the Tanzanian shilling traded at 20.42 and the Rwandan franc at 11.37.
Rising Oil Prices Pose Test
The shilling’s latest show of strength comes as global oil prices edge closer to the $100-a-barrel mark.
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According to the CBK, Murban crude oil prices rose to $95.41 per barrel on September 10 from $86.01 a week earlier amid renewed concerns over supply disruptions in the Middle East.
The regulator said the increase followed growing concerns over oil supply risks linked to renewed disruptions in the region.
The rise is significant for Kenya, which relies heavily on imported fuel to meet domestic demand.
Higher crude oil prices often translate into a larger import bill, increasing demand for dollars from fuel importers and creating additional pressure on the local currency.
The CBK also noted that inflation concerns remained elevated globally during the week under review as energy prices continued to influence economic conditions in major markets.
In Europe, the European Central Bank raised its policy rate by 25 basis points to 2.5 per cent, citing expectations that inflation could remain elevated because of high energy costs.
Meanwhile, the US Dollar Index weakened by 0.13 per cent during the week.
The softer dollar provided some support to emerging market currencies even as global investors weighed the impact of rising fuel prices and tighter monetary conditions.
For Kenya, attention is likely to remain on movements in oil prices and global currency markets in the coming weeks.
Any sustained rise in crude prices could test the shilling’s resilience by boosting importers’ demand for dollars.
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