Kenyan banks quote favorable rates as the shilling strengthens against the US dollar

Kenyan shilling gains strength, prompting a drop in dollar rates at commercial banks.
Major banks aligned on a maximum dollar quote of Sh164.50.
The surge in confidence is attributed to recent hard currency inflows.

A report by the Kenyan news publication, BusinessDaily, showed the compilation of data from 5 major Kenyan banks on Friday, which revealed that lenders quoted nothing surpassing Sh164.50/$1 dollar to those looking to buy the greenback.

“For example, Stanbic Bank quoted dollars at Sh164.50, the same rate as Cooperative, Diamond Trust, and Equity banks. KCB had a lower quote than its peers and sold dollars at Sh163.25,” the BusinessDaily report states.

Late in January 2024, the Kenyan Shilling experienced a gain of 0.73 percent against the US dollar. The currency had not experienced this sort of gain in over 3 years, as the Shilling went from 161.36 to 160.19.

According to BusinessDaily, several conversations with foreign exchange market participants highlighted that the market has gained confidence from recent hard currency inflows from multilateral lenders and strong foreign investor interest in the newly issued infrastructure bond.

“There have been big-ticket foreign investors coming into our bond markets as the real yields are now positive given the high-interest rates. People are also starting to get the sense that our domestic exchange rate is beginning to turn as we see a lot of cash coming in,” one of the interviewees noted.

Sources also pointed out that the CBK met with bank executives to discuss the issues surrounding the forex market.

The Kenya Bankers Association (KBA), the banking sector's lobby, said nothing about the meeting but attributed the drop in bank dollar rates to the attainment of equilibrium between demand and supply for dollars.