NAIROBI, Kenya, Apr 3 – The Kenyan currency is likely to touch the significant 80-shilling level to the dollar in the near future following the increased confidence in the market owing to a peaceful election, economic analysts say.
Rich Management CEO Aly-Khan Satchu argues that there will be increased Foreign Direct Investments (FDI) thus boosting the supply side of the economy adding that many international investors were waiting to see how the elections would go.
On Tuesday, the Central Bank of Kenya (CBK) quoted the shilling at Sh84.98 against the dollar, the first time since October last year when it closed at Sh84.91.
“I have an 80 objective for the dollar. The shilling is rallying because of the recent election process and the fact that the post election challenge was placed into the Supreme Court and ‘taken off the streets’,” Satchu told Capital FM Business. “I expect a crowding in of international money.”
The weakness in the shilling before the election, he said, was more because of domestics buying of the foreign currencies and these defensive trades are being unwound now.
The CBK however used its reserves to protect the value of the shilling by releasing the dollar and other key foreign currencies to the market.
“A wave of optimism sweeping across the market with good interest seen in the stock market could lead to better dollar inflows in the days to come. However this is short-lived as other fundamentals may come in after the new government,” Commercial Bank of Africa (CBA) dealer Duncan Kinuthia said, quoting the dollar at 84.90 buying and 85.10 selling on Wednesday.
On the other hand, Deloitte East Africa CEO Sammy Onyango noted that funds brought in from outside earlier, to finance campaigns, coupled with the ‘wait and see’ stance taken by businesses have lowered import demands leaving the shilling to be relatively stable and even gaining.
“In the same breath, improved economic activity could also increase demand for foreign currency to finance increased imports thus affecting the demand side. At the same time increased tourism flow could also bring in more forex. If all the above factors balance off, we could see minimum change,” Onyango told Capital FM Business.
However after the swearing in of the new president on Tuesday next week, focus will now be on the ICC cases facing Uhuru Kenyatta and William Ruto in relation to their impact on Kenya’s economy following sanctions fears.
“Kenya is the economic hub of the region. Her economic stability is important not only for her but for the region. ‘Crimes’ if any, were committed by individuals and therefore the country should not suffer. Co-operation with the ICC could divert direct or indirect sanctions,” Onyango noted.
Meanwhile Brand Kenya CEO Mary Kimonye insists that there is positive reaction from the international community, pledging to collaborate with all the stakeholders to market the country more despite future challenges.
“It is our work to give the citizens, visitors and all people interested in coming to Kenyapositive content that can allow them to makeKenya their choice, either for investment, for tourism or for residence.”