March 2024 FX outlook: A stronger Kenyan shilling boosts consumer spending
- So far in 2024, the Kenyan shilling has appreciated by 11.9%; what drove the upward trend?
- How will the currency's renewed strength impact the broader economy and consumer spending?
After shedding 21% of its value in 2023, the Kenyan shilling has appreciated 12% against the US dollar to close the month at Ksh143.6/$ from Ksh160.8/$ in January. On average, the currency gained ~5% between January and February 2024.
The shilling's appreciation was predominantly driven by positive market responses following the Eurobond issuance of $1.5 billion, which was oversubscribed 3x on February 12, 2024. This indicates a rebounding investor appetite towards the Kenyan economy.
Investors and businesses are becoming more confident because worries about the upcoming $2 billion Eurobond repayment in June 2024 are decreasing. This growing confidence is because external financing, amounting to $2.33 billion, can assist with loan repayment and fulfil the 2023/2024 budget commitments. This financial support reduces the likelihood of a default.
The Central Bank of Kenya (CBK) is also intervening in the forex market to stabilise the exchange rate. The 9 percentage point rise in
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