Kenyan Shilling Hits Four-Year High Against Dollar Amid Economic Recovery

The Kenyan shilling has made significant gains against the US dollar in 2025, appreciating by four percent year-over-year. According to an analysis by the African Development Bank (AfDB), the local currency strengthened to an average exchange rate of Sh129.3 against the dollar in 2025 compared to Sh134.7 in 2024.

The shilling's stability is a welcome change from its volatile past, particularly in early 2024 when it hit record lows above Sh160 against the dollar. Improved foreign exchange inflows, increased diaspora remittances, rebounding exports, and successful international debt issuance all contributed to the currency's recovery.

The stronger shilling has also contained imported inflation by reducing the cost of fuel, machinery, industrial inputs, and other commodities priced in dollars. Inflation eased to 4.1 percent in 2025 from 4.5 percent a year earlier, remaining comfortably within the Central Bank of Kenya's target range.

The AfDB notes that while the stronger shilling poses challenges for exporters by making Kenyan goods relatively more expensive in international markets, it has strengthened Kenya's economic outlook by easing inflationary pressures and supporting broader macroeconomic stability.