For nearly nine months, the Kenyan shilling has held steady at around 129 to the US dollar—a rare stretch of currency stability in a time of global economic turbulence. As of Monday, the Central Bank of Kenya (CBK) quoted the shilling at 129.26, a marginal change from its level of 128.91 on August 17, 2024.

So, what’s behind this unusual calm in the currency market?

Central Bank’s Silent Hand

The CBK’s steady grip on the currency is no accident. According to Treasury Principal Secretary Chris Kiptoo, the central bank has been actively intervening in the forex market to maintain this level. Without these interventions, Kiptoo noted, the shilling would likely have strengthened to around 120 against the dollar.

This hints at a deliberate policy by the CBK to hold the currency in place, not necessarily to reflect market forces, but to shield the economy from volatility.

Dollar Stability Masks Volatility Elsewhere

While the shilling has remained stable against the dollar, it has shown more volatility against other global currencies. The euro, for instance, has appreciated sharply amid tariff tensions between the US and its trade partners.

From February 2024 onwards, the euro traded in a wide range—from Sh132.25 to Sh149.72. The British pound, too, has fluctuated between Sh157.23 and Sh174.08 during the same period.

This suggests that while the CBK has effectively managed the dollar rate, other global factors continue to influence the shilling’s performance against non-dollar currencies.

Winners: Importers and Borrowers

For importers, the stable exchange rate has brought much-needed relief. In early 2024, the shilling had fallen to a low of 163 to the dollar, making imported goods significantly more expensive. Today, they’re enjoying more predictable and lower costs.

Foreign currency borrowers—like the Kenyan government, Kenya Power, and KenGen—are also benefiting. With a stronger shilling, they need fewer local currency units to service their dollar-denominated debts, easing repayment burdens.

This is particularly critical for a government that owes hundreds of billions of shillings to foreign creditors.

Losers: Exporters and Dollar Savers

But the stability isn’t good news for everyone.

Exporters who previously enjoyed a windfall from the weaker shilling are now seeing reduced earnings. With the local currency stronger, they get fewer shillings for each dollar they earn abroad.

For example, BAT Kenya’s net profit fell by 19.4% to Sh4.4 billion in the year ending December 2024, largely due to a drop in export income, despite rising operational costs. Similarly, Carbacid Investments reported a 10.3% drop in profits as export sales declined in value.

Dollar savers have also felt the pinch. The shilling value of dollar deposits in local banks fell to Sh1.25 trillion in December 2024—down from a record Sh1.6 trillion in January of the same year—signaling a loss in value from a shilling perspective.

Economic Strenght?

The stability of the Kenyan shilling against the US dollar is not just a reflection of economic strength—it’s a result of calculated and sustained central bank intervention. While it brings benefits like cheaper imports and reduced debt costs, it also creates challenges for exporters and savers.

Whether this balancing act is sustainable in the long term remains to be seen. But for now, the CBK seems determined to keep the currency calm—even if it means swimming against global market tides.