Kenya Shilling Weakens as Dollar Strengthens for Second Week

The Kenyan shilling continued its decline against the US dollar for the second week in a row, with the Central Bank of Kenya (CBK) reporting a rate of Ksh129.76 per dollar on October 2, up from Ksh129.48 the previous week. This weakening brings the shilling closer to the Ksh130 mark, a level not seen since early 2024 when the currency hit record lows. Despite this decline, Kenya’s foreign exchange reserves increased to $11.42 billion as of October 1, providing a buffer of 4.91 months of import cover, well above the required four months.

Other major currencies also strengthened against the shilling, with the euro trading at Ksh146.40 and the British pound at Ksh171.62. Diaspora remittances remained robust, reaching $5.19 billion in the 12 months to August 2026, a rise from $4.99 billion the previous year. The United States was the top source of these inflows, contributing 53% of the total.

The US dollar’s strength was driven by increased investor demand amid weakness in other major economies. The Dollar Index rose about 1% during the week, reaching its highest level since April 2025. However, a weaker-than-expected US jobs report on October 2 limited further gains, as it raised expectations of potential interest rate cuts by the Federal Reserve.

A stronger dollar could raise import costs in Kenya, affecting fuel, vehicles, machinery, electronics, medicines, and industrial materials. Exporters and recipients of dollar remittances may benefit, as their earnings convert to more shillings. At the Nairobi Securities Exchange, the NSE 20 Share Index closed at 2,986.60 points on October 1, up from the previous week’s 2,970.24 points.