Kenya's Central Bank Governor Kamau Thugge has attributed the Kenyan shilling's 18-month stability against the US dollar to strong foreign exchange reserves and other factors. The currency has traded between 128 and 130 shillings per dollar during this period. This marks a significant turnaround from its 21% crash in 2023.
The Kenyan shilling has maintained its stability against the US dollar for 18 consecutive months, trading between 128 and 130 shillings per dollar. For the past four weeks, it has been at 129.02 shillings against the dollar. This contrasts sharply with 2023, when it crashed by 21%, leading to soaring fuel prices, spiraling import costs, and businesses scrambling for unavailable dollars.
Since Governor Kamau Thugge assumed office in June 2023 and began raising interest rates, the environment has shifted entirely. He restored access to foreign exchange, ending a dollar shortage that had businesses hoarding greenbacks and banks avoiding fixed quotes. "Sometimes having enough forex is enough to dissuade people from just wanting to buy dollars; if they know there is enough, there is no panic," stated Governor Thugge.
The figures tell their own story. Kenya's one-year currency volatility stands at 1.6%, compared to 10.5% for South Africa's rand and a 40% surge for Ghana's cedi. Turkey's lira has slumped 19% since Donald Trump returned to the White House; the Kenyan shilling has moved just 0.5% in that same turbulent period.
Foreign investors purchasing local-currency bonds, rising foreign direct investment, and a current account that Thugge describes as "behaving relatively well" have all contributed to maintaining dollar quality. The Central Bank has bought more dollars to build reserves expected to reach Ksh1.82 trillion ($14 billion) by June 30 this year.
Additionally, a Ksh258 billion ($2 billion) boost is anticipated from the partial sale of Safaricom shares, another Ksh258 billion from eurobonds issued in February, plus Ksh110.3 billion ($855 million) from the Nedbank deal for NCBA bank.
On the other hand, Kenya's Parliamentary Budget Office (PBO) has cautioned that the shilling's unusual calm may mask deeper issues. It noted that while the shilling holds steady against the dollar, it has weakened 6.7% against the pound and 11% against the euro over the past year. "This unusual stability, compared to normal emerging-market volatility, points to tight exchange rate management or active liquidity smoothing by the central bank," stated the PBO in its report on Improving Expenditure Efficiency for Economic Growth.
Thugge's views are echoed by Independent Africa economist Charlie Robertson, who stated plainly that the Kenyan shilling is not basically dependent on its peg to the dollar, but a cap to stop excessive appreciation, and that Kenya does not need a boom-and-bust cycle. At 129.02 per dollar today, the shilling sits at a level Thugge calls palatable for both importers and exporters, a rare balance that Kenya appears determined to protect for now.
