National Treasury Cabinet Secretary John Mbadi has admitted that the government is currently artificially managing the Kenya Shilling exchange rate against the dollar at 129. CS Mbadi said on Tuesday that the Kenyan currency could have strengthened to 118 to the US dollar if the government allowed it to move freely based on increased inflows of the US dollar into Kenya.
“The stability of the shilling has a basis. If it is just allowed to free fall, the shilling would even trade at 118 to the dollar. Our current account balance has been improving and our exports are doing better,” said Mbadi. This implies that the government may be deliberately keeping the shilling at a weak position against the US dollar.
For close to one year now, the local currency to USD rate has been within the range of 129 without any significant movements. This stability has raised eyebrows and questions from international bodied including the International Monetary Fund (IMF).
According to the IMF, the Kenyan currency’s rate against the dollar of between 129.22 and 129.24 since January 2025 has been too stable to be natural. This is even as the local currency weakened against the two other main currencies, the Sterling Pound and the Euro by 12 percent and 6.1 percent respectively.
According to a report that appeared in a local daily, analysts have suggested that the government is keeping the local currency weak against the US dollar by using the Central Bank of Kenya to purchase dollars from the market.
The currency’s current rate is despite the US dollar being weaker against major currencies in 2025. As at October 2025, the US Dollar had dropped nearly 10 percent against major currencies including the Euro and the Sterling Pound, placing it on course for the worst performance in a calendar year for the first time in more than 20 years.
In Kenya though, the dollar has remained steady as the government blocks the local currency from gaining against the US currency.
The shilling first took a turn for the worse after the August 2022 General Elections. Forex data from the Central Bank of Kenya shows that as at August 2022, the Shilling traded at 119.12 against the US dollar. It then went on a free fall.
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On January 15, 2024, the local currency recorded a nasty historical low after sinking past 160 to the US dollar. Later that month, it touched an all-time low of 161 on January 23, 2024. In February, the local currency made a sharp turnaround.
Between February 9, 2024 and February 29, 2024, the local currency went from 160 to 143.5. A month later, by March 28, the local currency was at 131.8, about 2 units shy of its current rate – nearly two years later.
