The Kenyan shilling is expected to remain firm against the United States dollar amidst country’s fallout with the International Monetary Fund (IMF).
Experts say the shilling will mainly be supported by increased remittances from Kenyans in the diaspora, foreign direct investments and repatriation of cash stashed abroad.
On Wednesday, the local currency strengthened slightly against the US dollar despite IMF announcing it would not renew the $989.8 million (Sh99.81 billion) insurance for the shilling.
The US dollar traded at 100.70 units buying and sold for 100.90 in early trade, the highest since the 100.65/85 opening level last Wednesday.
The IMF standby loan was to cushion the shilling in case of pressure from external shocks such as high imports and foreign debt repayments.
“We looked at it (last Thursday’s depreciation of the shilling against the dollar) as a knee-jerk reaction by some corporates because it had no direct impact on real demand and supply in the market. It had no depth, it couldn’t run for very long,” a forex dealer at one of the leading investment banks told Business Daily.
Experts said they expect dollar inflows from Kenyans abroad, exports, and Kenyans returning back cash hidden in foreign accounts to outweigh net outflows.
