Kenya shilling has maintained a relatively stable exchange rate against the US dollar trading at an average of KES 129.4 in April 2025 from an average of KES 131.7 in April 2024.6 This surge marks a significant recovery after the pressure faced in 2023 and 2024 due to high inflation, rising debt and reduced forex inflows. Several factors have contributed to this positive shift including improved investor confidence, higher diaspora remittances which currently stand at USD 809.6 million in January and February reflecting an increase of 1.4% from USD 798.3 million the same period in 2024 and the Central Bank of Kenya’s (CBK) strict monetary policies.
For consumers, a stronger shilling means lower import costs which will likely reduce the price of goods like fuel, electronics and household items helping curb inflation. Businesses that rely on imported materials will also benefit from reduced operating costs which could help maintain profit and reduce consumer prices. The Central Bank of Kenya has taken a proactive stance to support the currency, primarily through high interest rates, tightening liquidity and carefully managing foreign reserves. These measures have curbed inflationary pressure and encouraged dollar inflows from investors and remittances. The consistent sale of dollars into the market has also helped prevent sharp currency swings and restored investor confidence.
For investors, this development presents mixed outcomes. On the one hand, a stronger shilling reduces currency-related risks for foreign investors making Kenya’s bonds and equity markets more attractive. However, it could also reduce the competitiveness of Kenyan exports as stronger exchange rates often make locally produced goods more expensive abroad. Additionally, diaspora remittances, a vital source of income for many families, may experience a decline in value when converted into Kenyan shillings, although the broader benefits of currency stability and reduced inflation will likely outweigh this impact.
Overall, the shilling’s recent recovery is a positive indicator of Kenya improving economic health. As long as the country continues to implement sound fiscal policies, manage its debt effectively and attract foreign investments, the strong shilling will provide a stable foundation for long-term growth.
For Kenya, it is crucial to continue implementing investor-friendly reforms such as tax incentives, simplified registration public-private partnerships and maintain fiscal discipline to ensure currency stability. For investors, diversifying into Kenya’s bonds and equity markets could be a strategic move, though it’s important to keep an eye on the potential impact on exports and adjust portfolios accordingly.
