How Kenya shilling became BEST performer in sub-Sahara Africa: Here’s what to know: The World Bank Group has credited interest rate increases by the Central Bank of Kenya (CBK) and the partial settlement of #kenya’s debut #eurobond for the shilling's rally seen since mid-February.
According to the multilateral lender, the higher benchmark lending rate by the CBK has amounted to a defense of the local unit while the partial repayment of the Eurobond notes maturing in June has revived demand for the shilling.
The unit has been the biggest gainer among peers in #subsaharanafrica on a year-to-date basis, alongside the Zambian Kwacha which has however shed some of its gains.
“The #kenyanshilling is the best-performing currency in the sub-continent and it recorded an appreciation of 16 percent so far this year. After strengthening by 14 percent in mid-February, the Zambian kwacha has lost some ground and recorded a year-to-date appreciation of 2.4 percent as of mid-March. In both cases, the monetary authority hiked interest rates to defend their currencies,” the #worldbank notes in a new regional outlook report.
“In Kenya, securing funds to repay its Eurobond falling due in June 2024 restored confidence and increased the demand for local #currency.”
CBK effected two consecutive raises of the benchmark interest rate in December and February at 13 percent from 10.5 percent with the primary goal of cushioning the shilling by attracting #foreignexchange flows into local #investments such as government securities.
This month, the CBK noted that raising interest rates had resulted in the desired outcome as it left the CBR unchanged at 13 percent.
In February, Kenya raised Sh195.3 billion ($1.5 billion) in new Eurobond notes to partly meet the maturity of the Sh260.4 billion ($2 billion) debut #sovereignbond due to mature in June. The news marked the turning point for the shilling as investor sentiment improved on the back of the elimination of what had largely been seen as a looming default.
Since then, the shilling which had lost ground on the #usdollar by more than two percent in 2024-as of January 30, #trading at Sh160.75, has rallied to Sh130.22, representing a year-to-date appreciation of 17 percent. Continue reading. https://www.businessdailyafric....a.com/bd/markets/cur
Kenya 🇰🇪 is an #afcfta member country
Source: Mark-Anthony Johnson’s LinkedIn Post
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