The Kenyan Shilling has stayed within a narrow range of about Ksh129 to the US dollar for more than 11 months. It has defied global economic turbulence and high debt obligations. The Central Bank of Kenya (CBK) attributes this stability to strong foreign exchange inflows, healthy reserves and prudent economic management.
Governor of CBK, Kamau Thugge, speaking during the release of the latest Monetary Policy Committee (MPC) decision on August 13, 2025, said the currency’s resilience is anchored on diversified sources of foreign exchange. These include exports such as coffee, tea, horticulture, vegetable oil and clothing, as well as services like tourism and transport.
Diaspora remittances, which rose by 12.1 percent in the year to June 2025, have also played a significant role. Offshore banking inflows and external support from development partners added to the strength.
Kenya’s foreign exchange reserves stood at about USD 11 billion as of mid-August, providing roughly 4.8 months of import cover. Goods exports increased by 7.7 percent in the 12 months leading to June 2025 while services earnings grew by 12.5 percent over the same period.
The country’s current account deficit narrowed to 1.6 percent of Gross Domestic Product (GDP) in 2024, down from 1.8 percent the previous year. It is projected to hold at 1.5 percent in 2025, fully financed through financial account inflows. This is expected to result in a USD 673 million increase in reserves.
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Market sentiment is also positive. The July 2025 Market Perceptions Survey shows that, 77 percent of banks and 71 percent of non-bank respondents, expect the exchange rate to remain stable or strengthen in the near term. Respondents cited improved forex inflows, external support and stronger investor confidence driven by low inflation and macroeconomic stability.
However, the CBK warns that risks remain. These include a rising import bill, large external debt service obligations and potential volatility in global oil and commodity prices.
The shilling had weakened to over KSh160 per US dollar by January 2024. Interventions later in the year, including CBK’s sale of dollars, helped restore stability. Since August 2024, the currency has traded close to KSh129, easing inflationary pressures and giving businesses greater certainty in pricing and planning.
Reflecting its confidence in the economic environment, the MPC on August 12, 2025, reduced the Central Bank Rate to 9.50 percent. The CBK says it will continue monitoring domestic and global developments to safeguard currency stability, support economic growth and keep inflation expectations in check.
By Benedict Aoya
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