ECONOMICS
19-03-2024 by redazione
After months of shilling devaluation and ventilated risks of the country's economic default, Kenya is recovering and its currency has regained value against the dollar and euro.
World financial institutions have rewarded the Kenyan shilling as the currency capable of the fastest and most important recovery since the beginning of the year. A historic turnaround, considering that less than 60 days ago it was the third worst performing currency in the world.
Whereas 2023 had seen the lowest lows in Kenya's financial history, with the US dollar touching 160 and the euro surpassing 170, after less than three months, a dollar was exchanged at 134 shillings and the euro dropped to 146.
As we wrote a few weeks ago, the turnaround is mainly due to the new Eurobond issued by the Kenyan government, to which international investors and savers have responded more than flatteringly. The impelling need for a new foreign currency bond by Kenya arose because of the certainty that it would be impossible to pay off the previous ten-year debt, $2 billion, maturing next June.
So the government came up with the idea of issuing a new bond of the same value, with an interest, to be paid in monthly instalments, of around eleven per cent.
Kenya's economic recovery, its agreements with the European Union and other countries, the once again growing GDP, and above all the interest on the new Eurobond, have convinced the international subscribers, who have injected as much as 5 billion into the state coffers, much more than the government would have expected.
This is the reason for the soaring shilling, which, according to the experts, should only fall and then stabilise after July.
So the currency's recovery is due to the inflow of dollars into the country, and President William Ruto has assured that the entire economy will benefit, not just the state coffers. In fact, the previous shortage of dollars had resulted in difficulties in importing and paying for products, especially fuel, that could only be paid for with the US currency, still considered the primary trading currency.
At this point, as Kenyan economist Vincent Kimosop confirmed in an interview with Kenyans website, 'to ensure that the shilling continues to strengthen, Kenya needs to export more than it imports, so as to create a dollar surplus'.
The Ruto administration's long-term plan to eliminate the dollar shortage is to subsidise manufacturing, in line with the country's long-term vision of making Kenya a manufacturing nation. This, according to the government, will end the over-dependence on imports, especially of agricultural products. In this sense, the government's moves to favour the introduction of European companies and related agreements, to import machinery rather than products, and to associate the presence of foreign entities more with the hiring and training of local employees, rather than simply selling and producing and exporting locally, without the involvement of local entities, should be read.
The next hurdle to overcome, for Kenya, will be the interest payments of the new Eurobond from next July, with the presentation of the new budget at the same time.
For now, the strong shilling will give some breathing space to importers and companies that are used to trading in dollars or euros, but earning and spending in shillings.
NEWS
by redazione
For those arriving in Kenya in the coming days, a cakewalk. For those living there and particularly Kenyan...
NEWS
by redazione
The U.S. dollar yesterday reached a new record high against the Kenyan shilling, which is at an...
ECONOMICS
by redazione
And suddenly the Kenyan shilling recovered, returning to its pre-summer levels and...
ECONOMY
by redazione
The World Economics Journal recently considered the devaluation of the Kenyan Shilling and considered that the currency of Kenya will remain at low values, compared to the dollar and euro, for at least 4 months.
by Freddie del Curatolo
Kenya has been facing its most serious economic crisis in its history since the beginning of the...
ECONOMICS
by Freddie del Curatolo
Despite the economic crisis, high public debt and internal management problems by the government, Kenya...
TURISMO
by redazione
For the United States, Kenya is once again one of the safest countries in the world to spend their...
NEWS
by Freddie del Curatolo
Everything had come to a halt before the pandemic, then the long election season, and now finally, thanks to...
AIR TRAVELS
by Freddie del Curatolo
After the abolition of the visa requirement for citizens from all over the world as of 1 January 2024 and the...
NEWS
by Freddie del Curatolo
There are two million new poor people in Kenya since the beginning of the Covid-19 emergency.
A World...
by Freddie del Curatolo
It is a very difficult time for importers of products from Italy and Europe to Kenya, amidst current...
ECONOMICS
by redazione
Those who have a Toyota in Kenya should hold on to it, especially if it is somewhat dated.
In the...
Kenya goes crazy for cryptocurrencies.
The fact emerges not only from the amount of articles...
Coronavirus effect but not only that, the fact is that the Kenyan Shilling has reached an ...
ECONOMY
by Freddie del Curatolo
What will become of Kenya's economy, which before the Covid-19 emergency was indisputably one...