The Kenya shilling has been on a rebound after recording weeks of losses in the month of July. The shilling opened the new month of August on Thursday with an official Central Bank of Kenya indicative exchange rate of 129.1510 against the greenback.
This was an improvement from the performance of the last day of July in which the local currency was at an official average of 129.9225. This means that the shilling gained against the US dollar by nearly one bob between the two days.
A spot check on commercial rates showed that banks were trading the dollar at between 132 and 135. The NCBA Bank Kenya, for instance was buying the US dollar at 125.80 and selling at 132.80. Equity Bank was trading at 126 buying and 132 selling.
Notably, the spread margin between selling and buying prices remains significantly higher amongst commercial banks when compared to the averages from the Central Bank, and the spread amongst Forex Bureaus.
For instance, on the last day of July, Satellite Forex Bureau was buying the US dollar at 128 and selling at 129, marking a spread of just one bob in contrast to the spreads of as high as Sh. 6 to Sh. 7 amongst commercial banks.
The Kenya shilling has been on a recovery since late January when it hit a historical low of 162 to the US dollar. The turnaround for the the local currency was sparked by Kenya’s partial settlement of the Eurobond debt that was due in June 2024, a payment that calmed fears over a potential default.
Since then, the local currency has gone on to recover by up to Sh. 34 and has appeared to stabilize around the Sh. 128 to Sh. 130 mark, with the exchange rate pendulum swinging marginally on both ends.
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However, in July, the local currency appeared to lose ground, and depreciated sharply from 128 to 130s, with Forex Bureaus at one point selling the US dollar at between 134 and 135, and commercial banks selling the greenback at highs of 135 to 136.
