Last week, the shilling strengthened 1.06 percent against the US dollar to 128.66 from 130.04 the week before, according to the CBK Weekly Bulletin.
This marks levels last witnessed in March of 2023, taking the year to date performance to 17.8 percent.The bullish trend is on the back of inflows from tea exports during the week coupled with expected inflows from the World Bank, hence shrinking dollar demand.Additionally, overall boosted investor confidence from the Eurobond settlement and the prevailing CBK’s hawkish stance buoyed the strong performance. “Our exchange rate is determined by the market forces, recently inflows from foreign exchange have been higher than the demand, so we expect going forward, a fairly stable exchange rate. We don’t see significant weakening or strengthening, there should be stability in the exchange rate,” CBK governor Kamau Thugge noted earlier this month.
Treasury bills were marginally undersubscribed, recording a decelerated subscription rate to 94.7 percent from 150.98 percent recorded in the previous week. The 91- day paper remained the most demanded paper with the subscription rate clocking 257.2 percent on account of increased investor demand on short term papers citing attractive yields.
Foreign exchange reserves stood at US$7.012 million, enough to cover 3.7 months of import cover, marginally below the CBK’s statutory requirement of 4 months.
Diaspora remittances edged higher by 1.8 percent to US$404.4 million in May 2024 from US$397.3 million in April 2024. Year on year growth saw a 14.9 percent uptick from US$352.1 million in May 2023, with the US remaining the largest source of remittances to Kenya, accounting for 48 percent.
Cumulative inflows for the 12 months to May 2024 totaled USD 4,509 million compared to USD 3,997 million in a similar period in 2023, an increase of 12.8 percent.
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