The US dollar strengthened slightly against the Kenya shilling on Monday, September 21, but remained below the KSh130 mark, extending a trend that has persisted for months despite a stronger dollar globally and rising interest rates in the United States.
Latest Central Bank of Kenya (CBK) data showed the shilling trading at about Ksh129.61 against the dollar, up from Ksh129.49 on September 14 and Ksh129.45 on September 11.
The dollar has remained below KSh130 even as global economic developments continue to favor the US currency.
Strong Reserves Support Kenya Shilling
According to CBK’s weekly bulletin for the week ending September 18, the Kenya shilling remained stable against major international and regional currencies during the week ending September 17.
The regulator reported that the currency traded at KSh129.62 per US dollar on September 17, up from Ksh129.45 a week earlier.
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The shilling’s stability has been supported by healthy foreign exchange reserves, which stood at USD 15.09 billion as of September 17, equivalent to 6.1 months of import cover and comfortably above the CBK’s statutory requirement of at least four months.
Against other major currencies, the shilling recorded mixed performance.
The British pound exchanged at Ksh174.40 on September 17, while the euro traded at Ksh149.56.
One hundred Japanese yen exchanged at Ksh83.54 during the same period.
The local currency also remained relatively stable against regional currencies.
The Ugandan shilling exchanged at 30.19 units to the Kenya shilling, while the Tanzanian shilling traded at 20.40 and the Rwandan franc at 11.35. turn1search1
Global Pressure Builds
The shilling’s resilience comes even as global conditions increasingly favor the dollar.
The CBK noted that the US Federal Reserve raised the target range for the federal funds rate by 25 basis points to between 3.75 percent and 4.0 percent during its September meeting, citing persistent inflationary pressures and continued strength in the American economy.
The regulator further reported that the US Dollar Index strengthened by 1.14 percent during the week under review.
At the same time, inflation concerns remained elevated in major economies.
In the United Kingdom, headline inflation rose to 3.1 percent in August from 2.9 percent in July, largely driven by higher energy prices.
Meanwhile, Murban crude oil prices eased slightly to USD 94.70 per barrel on September 7 from USD 95.41 a week earlier.
According to the CBK, the decline reflected easing supply concerns and profit-taking by market participants despite continued geopolitical tensions in the Middle East.
For Kenya, movements in global oil prices remain significant because the country relies heavily on imported fuel.
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Sustained increases in crude prices typically raise demand for dollars from fuel importers, pressuring the local currency.
US Federal Reserve Raises Rates After 3 Years
The US Federal Reserve raised its benchmark interest rate by a quarter percentage point on September 16, lifting the federal funds rate target range to 3.75 percent to 4.0 percent from 3.5 percent to 3.75 percent.
The Federal Open Market Committee (FOMC) approved the decision unanimously (12- 0), marking the first US rate increase since 2023.
In its policy statement, the Fed said economic activity in the United States was expanding at a solid pace, the labor market remained strong, and inflation was still elevated.
The central bank said the rate increase was intended to support a faster return of inflation to its 2 percent target.
Interest rate increases generally strengthen the US dollar because they raise returns on dollar-denominated assets such as Treasury bonds, making them more attractive to global investors.
Higher rates can also increase borrowing costs for households and businesses, slowing spending and helping contain inflation.
The Fed also signaled that additional tightening remains possible, with updated projections showing most policymakers expect at least one more rate increase before the end of 2026.
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