Kenyans Predict Average Cost Of Shilling Against US Dollar Up In 2024: "It'll Exchange At KSh 200"

• The Central Bank of Kenya (CBK) data showed the shilling exchanged at KSh 157 against the US dollar on January 3, 2024
• The shilling lost 27.36% against the dollar, compared to the KSh 123.55 exchange rate reported during a similar period in 2023
• Kenyans projected a further 'free fall' in the exchange rate for the shilling in based on the US Federal Reserve and Kenya's trade deficit

TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Kenya Shilling continues to depreciate against the US dollar in 2024.

The Central Bank of Kenya (CBK) report showed the shilling exchanged at KSh 157 per US dollar as of Wednesday, January 3.

The shilling declined by 27.36% against the dollar in the past year, down from the rate of KSh 123.55 in January 2023.

CBK tightened the monetary policies in December 2023, increasing base interest rates to 12.5% to stabilise the shilling.

Why Kenya shilling could lose more in 2024

In an exclusive interview with TUKO.co.ke, Market Analyst at FXPesa Kenya and Senior Contributor at Forbes Rufas Kamau projected a continued fall in the shilling based on the US Feds rate and Kenya's trade deficit.

"Despite the central bank's tightening policies, which hiked rates by 200 bps in December, the shilling has continued to lose against the USD.

"Considering that this is a US election year, if the US reverts to lower rates and quantitative easing, the shilling could stabilise. However, this seems unlikely since our trade deficit is worsening and foreign direct investments have slumped," explained Kamau.

Kamau noted that if the US props up the markets this year, it could attract more investors compared to Kenya.

He said Kenyans could struggle with low local investment appetite following President William Ruto's tax policies that are discouraging investment.

Kenyans' projection of the exchange rate in 2025

The majority of Kenyans predicted that the shilling could further depreciate to an average of KSh 200 in 2025.

@MiugoW said:

"This graph is evidence of gradual currency devaluation, no free market asset graph looks like this. Also if in Kenya you made 30% profit in dollars you've made 2.64%."

@brianne_adero wrote:

"Fed's going to cut interest rates beginning 2nd quarter or so. Kenya shilling will likely improve from this. Next year same time my prediction is 129."

@benkiprop replied:

"After the June Erurobond payment, it will likely stabilize a bit after that and 150 will be the new normal the central bank will be hoping to see."

@MarabaDavid argued:

"Kanede kaende! I foresee KES depreciating further."

@C_BOR said:

"Think we should be down to about 140."

How is Kenya shilling performing against other currencies?

Kenya National Bureau of Statistics (KNBS) report indicated that Kenya's currency lost value against prominent currencies such as the Euro, Pound Sterling, US Dollar, and Japanese Yen.

Kenyan shilling also lost value against the South African Rand, Tanzania shilling, and Uganda shilling in Q3 of 2023.

The Central Bank maintained the Central Bank Rate (CBR) at 10.50% throughout the entire third quarter of 2023 before raising it in quarter four.