The Kenyan shilling has maintained remarkable stability against the US dollar, hovering around a selling price of KSh 129 since late 2024. This consistency is not by chance but a result of several deliberate economic strategies, improved market fundamentals, and favorable international developments.
One of the primary drivers behind the shilling’s stability has been the significant increase in Kenya’s foreign exchange reserves. Over the past year, the Central Bank of Kenya (CBK) has worked to build up these reserves, providing a strong buffer against any external shocks. According to David Ndii, Chairperson of President William Ruto’s Council of Economic Advisors, this accumulation of reserves has been instrumental in insulating the shilling from excessive volatility. The presence of sufficient foreign currency has meant that the CBK can intervene effectively whenever needed, helping to maintain the KSh 129 per USD level consistently.
The role of the CBK itself has been critical. Through timely and targeted interventions in the forex market, the bank has managed to smooth out spikes in demand or supply that could have led to large swings in the exchange rate. Traders have noted that the exchange rate has generally stayed within a tight band of KSh 129.00 to KSh 130.00 per USD since October 2024, a sign that interventions have been measured and effective without distorting market forces too heavily.
Chris Muiga, a respected finance analyst, notes that another underlying factor supporting the shilling is the gradual adjustment in market expectations. “There has been a structural shift in how both businesses and individuals approach the foreign exchange market,” Muiga explains. “After a long period of dollar hoarding and speculation in 2023, confidence has returned. Importers now plan better for their forex needs, and exporters are not rushing to convert their earnings immediately. This has removed a lot of artificial pressure that used to cause sudden shilling fluctuations.”
Another factor reinforcing the shilling’s steadiness has been an improvement in Kenya’s balance of payments. The country has experienced a surge in diaspora remittances, which totaled USD 5.2 billion in 2024. These inflows have helped balance demand for dollars, especially when combined with a narrowing current account deficit. Agricultural exports have remained robust, and tourism receipts have also shown signs of recovery, providing additional sources of foreign exchange.
At the same time, the government’s strategy to secure oil on credit terms from Gulf suppliers has reduced immediate demand for hard currency. By negotiating a 180-day credit period for oil imports, the government effectively decreased the monthly dollar outflow by approximately $500 million. This innovative financing arrangement has lessened pressure on the shilling while also easing the financial strain on importers and maintaining smoother cash flows within the economy.
Chris Muiga further points out that monetary policy has also complemented these efforts. “The CBK’s cautious approach to interest rates has made Kenyan assets more attractive to investors without overheating the economy,” he says. “By offering relatively higher yields compared to developed markets, Kenya has kept foreign portfolio investors interested, which boosts forex inflows and strengthens the shilling.”
Investor confidence has indeed played a complementary role in supporting the currency. In February 2025, Kenya successfully issued a $1.5 billion Eurobond, which was oversubscribed, signaling strong investor faith in the country’s economic management. Furthermore, the International Monetary Fund (IMF) reached a staff-level agreement with Kenya for a $976 million loan facility, providing additional reassurance to markets about Kenya’s fiscal trajectory. These developments have bolstered the perception of Kenya as a relatively stable investment destination, further strengthening the shilling’s position.
Market dynamics themselves have favored stability. Analysts and traders have pointed out that the supply of dollars from exports, remittances, and loan inflows has been well-matched with the demand for imports and debt servicing. This balance has meant that there has been no extraordinary pressure either to appreciate or depreciate the shilling significantly.
In conclusion, the Kenyan shilling’s resilience at around KSh 129 per US dollar is the result of deliberate policy choices, strong macroeconomic management, improved foreign exchange reserves, innovative credit arrangements for imports, prudent monetary policies, and positive market sentiment. As Chris Muiga summarizes, “The shilling’s current strength is not just about reacting to the market. It’s about building a system where the fundamentals support sustainable stability. If these conditions are maintained, Kenya could be entering a new era of forex predictability unseen in recent years.”
