Central Bank of Kenya (CBK) Governor Kamau Thugge has projected stability for the Kenyan Shilling, dismissing expectations of significant fluctuations. During the June 2024 Monetary Policy Committee (MPC) press conference, Thugge assured that the exchange rate would remain steady, preventing both dramatic appreciation and weakening.
Thugge emphasized that the Shilling’s performance is primarily market-determined. He confirmed that the CBK would intervene only to curb excessive volatility. “We don’t see significant weakening or significant strengthening. There should now be stability in the exchange rates,” Thugge stated.
He attributed the recent stability to increased foreign exchange inflows and effective monetary policy measures. Reforms in the foreign exchange market and the buy-back of the June 2024 Eurobond also played crucial roles.
Thugge highlighted that the Shilling had strengthened by about 17 percent against the US Dollar, making it one of the best-performing currencies globally. He noted that the Kenyan Shilling outperformed other regional currencies, except for Botswana’s Pula. In contrast, the Egyptian Pound and the Nigerian Naira displayed weaknesses.
As of June 6, commercial banks quoted the Shilling at 130.00/131.00 against the Dollar, maintaining the same rate as the previous day. This recovery began in late January and has continued to bolster the Shilling against major world currencies.
Thugge pointed out that the Shilling’s appreciation has significantly reduced Kenya’s debt burden. In April, the central bank revealed that the stronger Shilling had cut the country’s debt by Ksh1 trillion, lowering the debt servicing cost. Kenya’s external debt reduced from Ksh11 trillion to Ksh10 trillion due to the currency’s stabilization.
“We estimate that we have reduced the Shilling-denominated dollar debt by Ksh1 trillion,” Thugge explained. He credited the issuance of infrastructure bonds and increased remittances for this improvement.
The CBK Governor remains confident that the measures taken have safeguarded the country’s financial stability. Thugge’s forecast of a stable Shilling offers a positive outlook for Kenya’s economic future.
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