The National Treasury has outlined key factors contributing to the recent stabilization of the Kenyan Shilling against major international currencies such as the Dollar and the Euro.

The third Quarterly Economic and Budgetary Review attributed the Shilling’s stability to three primary factors: resilient diaspora remittances, sufficient foreign reserves, and robust export earnings. According to the report, Kenyans living abroad played a crucial role in stabilizing the Shilling by sending money back home in foreign currencies, predominantly in Dollars, thereby bolstering foreign reserves to meet the demand for imports.

The National Treasury highlighted the Shilling’s notable strengthening against the Euro and the Sterling Pound, with gains of 18.0% and 18.3%, respectively, by the end of March 2024 compared to earlier periods. Additionally, against the Dollar, the Shilling appreciated by 5% in the twelve months leading up to March 2023.

The Treasury attributed the Shilling’s appreciation to the de-risking of the 2024 Eurobond and substantial forex inflows from oversubscribed Government infrastructure bonds. As a result of the Shilling’s stabilization, foreign investors have increased their investments in Kenya, as evidenced by growth in the Nairobi Securities Exchange’s Share Index and Market Capitalization.

The positive impact of resilient diaspora remittances and enhanced export activities has not only stabilized the Shilling but also attracted foreign investment, signaling a promising outlook for Kenya’s economic growth and stability.