Kenyan Shilling Gains 17 Percent As Central Bank Cuts Interest Rates

14 October 2024
Daba Finance (Abidjan)

TLDR

  • Kenyan shilling appreciates 17% to reach 129 KES per dollar by October 2024 following Central Bank interest rate cuts.
  • Inflation dropped to 3.6% in September from 4.4% in August, per Kenya National Bureau of Statistics.
  • CBK reduces benchmark rate from 13% to 12% to stimulate private sector lending and investment.

The Kenyan shilling has appreciated 17% against the U.S. dollar in 2024, reaching 129 KES per dollar by October.

The recovery follows two consecutive interest rate cuts by the Central Bank of Kenya (CBK), aimed at supporting economic growth amid a drop in inflation. Inflation fell to 3.6% in September from 4.4% in August, per the Kenya National Bureau of Statistics.

The shilling, which had fallen to a low of 160 KES per dollar in January, began to recover in February as inflation eased. The CBK has lowered its benchmark rate from 13% to 12% to spur private-sector lending and investment.

Key Takeaways

The Kenyan shilling's 17% rise in 2024 reflects a reversal from its 29% drop in 2023. Declining inflation, driven by lower food and housing costs, has allowed CBK to cut interest rates, boosting the shilling. Economic resilience, notably in agriculture and exports, has supported this recovery, with further gains likely if inflation remains stable. Lower borrowing costs could continue strengthening the local currency and boosting private sector growth.

Read the original article on Daba Finance.

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