The Kenyan shilling has become the world’s best-performing currency in less than three months after gaining 20% against the U.S. dollar, far outpacing the second-place Sri Lankan rupee which strengthened 6.1%.
As of Thursday, the shilling gained 1.4% to trade at 136.79 per dollar, its 10th consecutive day of gains. This longest streak of appreciation has largely been attributed to the government’s $1.5 billion Eurobond issuance in February used to buy back part of a Eurobond maturing in June.
“The shilling’s appreciation can largely be ascribed to upsized packages from both the International Monetary Fund and World Bank, as well as the issuance of a new Eurobond,” one economist noted.
Treasury Principal Secretary Chris Kiptoo said in February the new Eurobond attracted over $6 billion in investor bids, defending the move. Oversubscription of Treasury bonds, including $1.2 billion in infrastructure bonds by the Central Bank of Kenya in January, was another factor.
The National Treasury raised $3.2 billion from foreign investors purchasing the infrastructure bonds, seen as a vote of confidence in Kenya’s economic and debt strategies.
Increased diaspora remittances also contributed to the shilling’s surge. In February, Kiptoo warned Kenyans hoarding dollars risked incurring losses, projecting further stability for the local currency.
“Sell your dollars and get back to business. Don’t do any speculation anymore,” Kiptoo remarked.
