Kenyan Shilling Sees 17% Appreciation Against US Dollar Amid Interest Rate Cuts and Falling Inflation
In a significant turn of events, the Kenyan shilling has appreciated 17% against the US dollar in 2024, reaching 129 KES per dollar by October. This remarkable recovery is attributed to the Central Bank of Kenya’s (CBK) two consecutive interest rate cuts, aimed at supporting economic growth amidst a decline in inflation.
According to the Kenya National Bureau of Statistics, inflation dropped to 3.6% in September from 4.4% in August, paving the way for the CBK to reduce its benchmark rate from 13% to 12%. This move is expected to stimulate private sector lending and investment, further boosting the shilling’s value.
The shilling’s recovery began in February, following a low of 160 KES per dollar in January, as inflation eased. The CBK’s interest rate cuts have been instrumental in this turnaround, allowing the shilling to appreciate and potentially continue its upward trend.
The Kenyan economy has shown remarkable resilience, with agriculture and exports playing a significant role in this recovery. As long as inflation remains stable, further gains are likely, and lower borrowing costs could continue to strengthen the local currency and boost private sector growth.
In conclusion, the Kenyan shilling’s 17% appreciation against the US dollar is a testament to the country’s economic resilience and the CBK’s effective monetary policy. As the economy continues to recover, investors and businesses can look forward to a more stable and favorable environment, with potential for further growth and development.
