The Kenyan shilling has remained resilient against the US dollar in recent days, despite fluctuations in global currency markets and economic trends.
According to the latest report from the Central Bank of Kenya (CBK), the exchange rate stood at Sh131.87 per US dollar on May 30, 2024, marking a minor uptick from the Sh131.36 recorded a week prior on May 23. This stability persisted even as the US dollar experienced a 0.4 per cent weakening against other major global currencies. Inflation continues to be a pressing concern in developed economies with Germany’s headline inflation rising to 2.4 percent in May 2024 from 2.2 percent in April, while France’s inflation rate held steady at 2.2 percent.
These inflationary pressures have ripple effects on currency markets worldwide, including the Kenyan shilling. However, economic analysts predict that the shilling may reach parity with the US dollar at the Sh100 mark by September, signalling a return to pre-pandemic levels. This optimistic forecast is predicated on the expectation that the US Federal Reserve will lower its policy rate, which currently stands at 5.5 per cent, an increase from the 5.25 per cent seen last year that had bolstered the dollar’s strength against other currencies.
The CBK’s weekly bulletin also drew attention to shifts in global fuel prices, noting that Murban oil prices rose to USD 84.75 per barrel on May 30, up from USD 83.60 per barrel on May 23. This increase is attributed to growing global demand and anticipation surrounding the upcoming OPEC+ meeting slated for June 2, 2024. On the domestic front, the Kenya National Bureau of Statistics (KNBS) reports a slight uptick in the cost of living, with inflation rising to 5.1 per cent in May from 5.0 per cent in the previous month. This increase was primarily driven by various factors, including rising food prices, transportation costs, and housing expenses.
