The World Bank had named the Kenya shilling as the best performing currency i Sub-Saharan Africa so far in 2024.
This follows sustained gains by the local currency that have seen it recover from lows of 161 against the US dollar to the current levels of 130.
According to the Africa Pulse Report by the World Bank, the Kenya shilling has gained 16 per cent in value this year alone to beat the Zambian Kwacha as best performing currency.
“The Kenyan shilling is the best-performing currency in the subcontinent as it recorded an appreciation of 16 per cent so far this year. After strengthening by 14 per cent by mid-February, the Zambian kwacha has lost some ground and recorded a year-to-date appreciation of 2.4 per cent as of mid-March,” the report by the World Bank stated.
The World Bank attributed the gains made by the local currency to the hiked lending rates by the Central Bank of Kenya and the partial settlement of the Eurobond that took place in early February before the shilling made a turnaround.
“In both cases, the monetary authority hiked interest rates to defend their currencies. The Bank of Zambia additionally raised commercial banks’ reserve ratios. In Kenya, securing funds to repay its Eurobond falling due in June 2024 restored confidence and increased the demand for local currency.”
The CBR currently stands at 13 per cent. In February 2024, Kenya raised Sh. 195.3 billion ($1.5 billion) in new Eurobond notes to partially settle the maturity of the Sh. 260.4 billion ($2 billion) debut sovereign bond that is due to mature in June this year.
This settlement calmed fears that the country would default and stirred sentimental value towards the local currency.
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This saw the shilling make a turnaround in defiance to predictions that had projected the shilling hitting 170 to the US dollar i best case scenario and 200 to the US dollar in worst case scenarios.