Why the shilling’s calm this year is hiding a harder story underneath
On paper it has been a steady year for the currency. A closer look suggests the calm owes more to seasonal inflows than to any structural fix.
On paper, this has been one of the shilling’s steadiest years in a decade. Importers have planned with more confidence, and the panic buying of dollars that marked earlier years has faded.
A closer look at the timing of foreign-currency inflows, however, suggests the calm owes more to seasonal factors than to a structural fix.
Leaning on the diaspora
Money sent home by Kenyans abroad has become one of the economy’s most reliable sources of foreign exchange. That is good news — until it isn’t. Remittances tend to slow when economies abroad slow, and they rarely feature in public budget debates.
The same inflows propping up the currency this year are the first thing to soften when global conditions change.
Currency analyst, Nairobi
What would a real fix look like?
Analysts point to export diversification, a deeper local bond market and lower reliance on short-term borrowing. None of these are quick, and none make headlines. But without them, the next shock may arrive without warning.
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