Shilling hits 6-month high to dollar

[Sinister]

The shilling has strengthened to a six-month high, supported by strong dollar inflows from buyers of Treasury bonds and remittances by Kenyans in the Diaspora.
The Kenyan currency closed at a high of 100.39 units to the dollar in Friday’s foreign exchange market trading.
Reuters live trade data showed the shilling strengthening for the better part of Friday, touching 100.31 at 3 p.m before weakening slightly to 100.39 units as the day drew to a close.
The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt.
“The Kenyan shilling firmed against the dollar on Friday due to dollar inflows from diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector,” said Reuters. The value of the local unit rose steadily in the course of last week. It had closed the previous week at 101.0833, before rising sharply on Monday when it hit 100.80 units to the dollar. It continued to strengthen in the course of the week, Central Bank of Kenya (CBK) data showed.

The 100.39 point is the strongest average trading for the local unit since August 10 last year, when it stood at 100.36 to the dollar – indicating that the current level is nearly a six-month high.
Following its last week’s meeting, the Monetary Policy Committee (MPC) indicated that the shilling was well cushioned, noting that the country had adequate foreign exchange reserves amounting to 5.3 months of import cover.
“The CBK foreign exchange reserves, which currently stand at US dollars 8.131 billion (5.3 months of import cover), continue to provide adequate cover and a buffer against short-term shocks in the foreign exchange market,” said the MPC.
Mid-week analysts had said that the value of the local currency would depend on the dollar flows after noting that it had been under pressure in some trading sessions.
It was time for buyers to get the foreign currency on the cheap. Commercial Bank of Africa (CBA) said on Thursday that the spell of strengthening shilling seen in recent days had prompted corporate buyers to take advantage, pushing the currency even stronger.
“The bout of shilling strength recently witnessed prompted corporate buyers to take advantage of the somewhat favourable prices, pushing the US dollar-Kenya shilling pair to the upper levels of the recent band,” said CBA.
The strengthening of the local currency came even as some analysts warned that it remained exposed to weakness because of the current account and fiscal deficits.
Some have advised investors to buy Kenyan Eurobonds to mitigate against the expected weakness of the local currency.
“We believe that the Eurobonds offer attractive returns and can act as a hedge against the Kenya shilling’s likely depreciation,” Dyer & Blair Investment Bank told clients in a recent research note.

 

[vulcan]

Mkikuyu- Akili timamu come analyse this ....😀😀

 

[Kanye2016]

Mnapoandika Shillings kwenye heading bora muandike kabisa kama ni Kenya shilling maana wengine na Tsh yetu tumejileta fasta tushangae kumbe siyo yetu

 

[Mkikuyu- Akili timamu]

Mkikuyu- Akili timamu come analyse this ....😀😀

"The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector"

1. Reduced demand for oil(Energy) due to high taxes is Not a good thing for jobs in the economy
2. Reduced imports of manufacturing machinery and plants indicates a drop in the sector.. Not good for jobs
3.Instead of selling goods and services to earn our ForeX we are selling debt to international investors while killing manufacturing
4.Remittances are not taxable. They do not add anything to GoK coffers. They only prop the shilling making our exports uncompetitively expensive.
This is the kind of rosy, sweetheart economics which rides high on debt and foreign remittances but is completely divorced on the local economy that brought down greece

 

[Stano]

1) The drop in global oil prices has more than written off the price increment from VAT. According to ERC - there was 15% drop in landing cost of imported fuel this month.Pump prices for diesel have dropped by 10shs. This is probably why the oil importers are spending less dollars this quarter.

2) Most of manufacturing in kenya drop to it's lowest in Dec (festive period factory closures) and doesn't really pick until maybe march - esp agro-processing due subdued rain

3) Overall like kenya economy - Kshs strength - lies in the diversity of the economy. No one sector is single source of forex. And no one sector needs all the dollars.

And that really underlies the Kenya economic resilience. And don't continue to hold your breathe waiting for an economic disaster - Kenya well-diversified economy will grow from strength to strength - unless we have a civil war.

"The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector"

1. Reduced demand for oil(Energy) due to high taxes is Not a good thing for jobs in the economy
2. Reduced imports of manufacturing machinery and plants indicates a drop in the sector.. Not good for jobs
3.Instead of selling goods and services to earn our ForeX we are selling debt to international investors while killing manufacturing
4.Remittances are not taxable. They do not add anything to GoK coffers. They only prop the shilling making our exports uncompetitively expensive.
This is the kind of rosy, sweetheart economics which rides high on debt and foreign remittances but is completely divorced on the local economy that brought down greece

 

[Mkikuyu- Akili timamu]

1) The drop in global oil prices has more than written off the price increment from VAT. According to ERC - there was 15% drop in landing cost of imported fuel this month.Pump prices for diesel have dropped by 10shs. This is probably why the oil importers are spending less dollars this quarter.

2) Most of manufacturing in kenya drop to it's lowest in Dec (festive period factory closures) and doesn't really pick until maybe march - esp agro-processing due subdued rain

3) Overall like kenya economy - Kshs strength - lies in the diversity of the economy. No one sector is single source of forex. And no one sector needs all the dollars.

And that really underlies the Kenya economic resilience. And don't continue to hold your breathe waiting for an economic disaster - Kenya well-diversified economy will grow from strength to strength - unless we have a civil war.

You live in a coocun of blissful ignorance. And hey no one is holding his breath and waiting for kenya to die, contries dont die afganistan, syria, libya etc are very much alive and kicking..'Resilient' as you say.

1. Dropping of Oil has had no effect on the hiked fares / transport costs..The demand curve is still strangled by high costs that were passed on. So no, the import bill for oil dropped off along time ago and has continued despite the low petrol price

2. Manufacturing does not work that way, Import of Plant& Machinery is not dependent on a 3 day december holiday break..These are normally longterm growth decisions made by companies..and when you see a drop in foreign machinery bought, well the explanation is that companies have no plans for expansion

3. As I said, KSH is only now being propped by remmittances (Not taxable, and after being invested in kenya they attract a hefty tax relief further increasing the Gvt payable tax refunds)

4. Kenya is selling eurobond debt instead of coffee/tea/flowers..How stupid is that?
Smh

 

[kennedy0000]

1. Reduced demand for oil(Energy) due to high taxes is Not a good thing for jobs in the economy

Fuel is retailing cheaper right now than before the tax increase, because of falling global prices.
Where you heard that there is reduced demand only you can tell us.

 

[kennedy0000]

Kenya is selling eurobond debt instead of coffee/tea/flowers..How stupid is that?

Horticulture exports hit new highs last year.
Tourist arrivals hit new highs last year.

You just make up facts.

 

[Stano]

Inflation is under control. Stop twisting and turning - you'll only end up tying yourself in a knot. We had 8% tax increase and we are getting 15% tax cut from global oil prices dynamic.Sounds like it worked out - gov get to reduce it's deficit and nobody suffers. I am yet to check figures of oil consumption - but I know there small a slight dip and then recovery - the economy grew at 6% that quarter. I also read that power consumption is now at it highest and approaching 2000MW.

As regard machinery & manufacturing - the seasonal small changes in demand from sectors - doesn't mean that manufacturing is now gone to dogs. Again don't hold you breathe. I think according to figures I saw from KNBS - manufacturing pretty much recovered in 2018 and I don't see why you're worried.

Remittance is not a new thing. We are just seeing more and more increment as our financial systems integrate deeply with western thanks to mobile money & all the innovations around there.

Kenya selling eurobond is great. It was watershed moment. Gov has to borrow - it was borrowing internally while not begging WB/IMF for their loans - now we can decide to float debt internally or externally - without as much drama. Whatever is being borrowed was already budgetted for. We are also using forex to pay a lot of debts that have matured. In forex terms - it's basically a zero sum game.

You need to really study how well-diversified and resilient the kenyan economy is - I think apart from Agriculture that still dominant & weather-indexed - everything else is pretty much balanced.

And even within that agricluture - we don't relie on one or two crops - but so many crops and livestocks - we are generally on good-stead.

The gov can go to bed and economy will grow at 6%. That is a matured economy.

You live in a coocun of blissful ignorance. And hey no one is holding his breath and waiting for kenya to die, contries dont die afganistan, syria, libya etc are very much alive and kicking..'Resilient' as you say.

1. Dropping of Oil has had no effect on the hiked fares / transport costs..The demand curve is still strangled by high costs that were passed on. So no, the import bill for oil dropped off along time ago and has continued despite the low petrol price

2. Manufacturing does not work that way, Import of Plant& Machinery is not dependent on a 3 day december holiday break..These are normally longterm growth decisions made by companies..and when you see a drop in foreign machinery bought, well the explanation is that companies have no plans for expansion

3. As I said, KSH is only now being propped by remmittances (Not taxable, and after being invested in kenya they attract a hefty tax relief further increasing the Gvt payable tax refunds)

4. Kenya is selling eurobond debt instead of coffee/tea/flowers..How stupid is that?
Smh

 

[Mkikuyu- Akili timamu]

Fuel is retailing cheaper right now than before the tax increase, because of falling global prices.
Where you heard that there is reduced demand only you can tell us.

Fares / transport costs have not followed the petrol prices and will not do so now or anywhere soon, that is the kenyan culture., so yes high price is still strangling demand for services dependent on oil

 

[Mkikuyu- Akili timamu]

Horticulture exports hit new highs last year.
Tourist arrivals hit new highs last year.

You just make up facts.

You dont READ!
This part of the article explains why the currency is up👇👇👇
"The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector"
There is no mention of bumber export of flowers or etc but that does not mean that horticulture has not been growing..Boss stop clucting on straws and stick to the topic

 

[Stano]

I think it a fair explanation. Horticulture basically hit the roof. The quoted traders are analyzing the short term strengthening of the dollar. In any case you'll wait a little longer for Kshs to depreciate by 17%. But you're not alone - IMF will carry most of the plank anyway.

You dont READ!
This part of the article explains why the currency is up👇👇👇
"The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector"
There is no mention of bumber export of flowers or etc but that does not mean that horticulture has not been growing..Boss stop clucting on straws and stick to the topic

 

[Mkikuyu- Akili timamu]

I think it a fair explanation. Horticulture basically hit the roof. The quoted traders are analyzing the short term strengthening of the dollar. In any case you'll wait a little longer for Kshs to depreciate by 17%. But you're not alone - IMF will carry most of the plank anyway.

JPM does not wake up everyday thinking about KSH, he has so many things, hospitals roads schools etc to build and think about.
So no, no one is waiting with baited breath, not even war torn syria or libya. KSH is not a hard currency TZS is the most used curre"The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector"ncy among all EAC citizens just by population.
People are minding their own business, mind yours

 

[Stano]

I see you're projecting it to JPM. It was actually more about you waiting with baited breath for bad news from Kenya. That is why someone tagged you in there.

I am glad you're starting to mind your own business. Kenya economy is on auto-pilot. It can only go up. By this time next year we will be talking 100B dollar economy and still growing at managed 6%.

JPM does not wake up everyday thinking about KSH, he has so many things, hospitals roads schools etc to build and think about.
So no, no one is waiting with baited breath, not even war torn syria or libya. KSH is not a hard currency TZS is the most used curre"The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector"ncy among all EAC citizens just by population.
People are minding their own business, mind yours

 

[kennedy0000]

You dont READ!
This part of the article explains why the currency is up👇👇👇
"The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector"
There is no mention of bumber export of flowers or etc but that does not mean that horticulture has not been growing..Boss stop clucting on straws and stick to the topic

When you say Kenya is selling Eurobond instead of flowers, how do you support your claims when flower exports reached record highs.
We are a very diversified economy and our shilling getting stronger is not down to one single thing.

 

[Msapere]

JPM does not wake up everyday thinking about KSH, he has so many things, hospitals roads schools etc to build and think about.
So no, no one is waiting with baited breath, not even war torn syria or libya. KSH is not a hard currency TZS is the most used curre"The news agency quoted traders saying that the strengthening of the currency was a result of increased dollar inflows, diaspora remittances and portfolio investors buying government debt amid reduced dollar demand from the energy and manufacturing sector"ncy among all EAC citizens just by population.
People are minding their own business, mind yours

The moment you qouted JPM is the moment you lost this battle

 

[kennedy0000]

Fares / transport costs have not followed the petrol prices and will not do so now or anywhere soon, that is the kenyan culture., so yes high price is still strangling demand for services dependent on oil

Kenya's transport sector is the most market driven of any sector.
So I'm pretty sure competition has driven the prices down to previous levels. In any case, most routes did not see a rise after the tax.
Other than the normal inflation rises, fares are stable.

 

[Mkikuyu- Akili timamu]

When you say Kenya is selling Eurobond instead of flowers, how do you support your claims when flower exports reached record highs.
We are a very diversified economy and our shilling getting stronger is not down to one single thing.

Eurobond brought in $2bn- That is Twice the sales value of Tea( and about 3-5 times all tax revenue - not sales- from horticulture)
So yes, Eurobonds is a very large earner of forex that goes to GoK coffers.
We are making more cash from selling eurobonds than all the taxes(Not sales) we collect from sale of horticulture

 

[Mkikuyu- Akili timamu]

I see you're projecting it to JPM. It was actually more about you waiting with baited breath for bad news from Kenya. That is why someone tagged you in there.

I am glad you're starting to mind your own business. Kenya economy is on auto-pilot. It can only go up. By this time next year we will be talking 100B dollar economy and still growing at managed 6%.

People tag me Coz am well known in JF to be objective in economic analysis, I do not let the demons of tribalism or nationalism dictacte my analysis of kenya where I live and was born.
That said, No one is waiting in baited breath for any news good or bad from kenya,tanzania, timbuktu or nepal..People are busy with their day to day life..

 

[Msapere]

People tag me Coz am well known in JF to be objective in economic analysis, I do not let the demons of tribalism or nationalism dictacte my analysis of kenya where I live and was born.
That said, No one is waiting in baited breath for any news good or bad from kenya,tanzania, timbuktu or nepal..People are busy with their day to day life..

Dont sugar-coat yourself,you always pick negatives from KE and Positives from Tz..youare not a good economist at all and u are one of the many Tanzanians in this forum who would always wish that Kenya recess so that Tz can catch up..You terribly failed to act kenyan here and stano always exposses your wikipedia,twitter(Ndii) and facebook economics.