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.