The Kenyan shilling has ranked among the most stable currencies globally over the past year. The currency has maintained steady performance against the United States dollar during that period.
Data published by Bloomberg shows the Kenyan shilling recorded very low volatility in global currency markets. The figures place the local currency among the most stable exchange rates worldwide.
Bloomberg reported that the Kenyan shilling recorded a volatility rate of only 1.5 percent. The data ranks the currency among the least volatile units in international financial markets.
Low volatility indicates limited fluctuations in exchange rate movements over a given period. Investors often prefer currencies that show predictable and stable performance patterns.
Comparison with Other Global Currencies
Several major global currencies recorded significantly higher volatility during the same period. The Argentine peso recorded the highest volatility rate among the listed currencies.
The peso posted a volatility rate of about 22.4 percent during the same period. Other currencies also recorded higher fluctuations compared with the Kenyan shilling.
The Israeli shekel followed with a volatility rate of about 11.8 percent. The South African rand recorded another high volatility level at roughly 10.8 percent.
The Indian rupee posted a volatility rate of about 4.8 percent during the year. These figures show that the Kenyan shilling maintained stronger stability in comparison.
Only the Hong Kong dollar posted a lower volatility rate globally. The Hong Kong dollar recorded about 0.9 percent volatility over the same period.
Why Currency Volatility Matters
Currency volatility measures how often and how strongly exchange rates fluctuate over time. Financial markets use this indicator to measure risk and uncertainty.
Lower volatility normally signals a stable and predictable economic environment. Businesses and investors often prefer stable currencies when planning long-term transactions.
A stable currency helps businesses forecast costs and revenues more accurately. Importers and exporters benefit from reduced uncertainty in international trade.
A stable exchange rate can reduce the cost of imports for local businesses. Lower import costs can help control inflation and stabilise consumer prices.
Predictable currency performance also improves investor confidence in the economy. Investors often increase capital flows into countries with stable financial systems.
Businesses also gain better planning capacity when currency values remain predictable. Stable exchange rates support long-term contracts and investment decisions.
CBK Explains Reasons for Stability
Central Bank of Kenya Governor Kamau Thugge recently explained factors supporting the shilling’s stability. He pointed to improvements in Kenya’s external financial position.
He said the current account balance has shown stronger performance recently. Increased foreign direct investment has also supported foreign currency inflows.
Higher participation in local currency government bonds has strengthened foreign exchange reserves. Diaspora remittances and stronger export earnings have also supported the currency.
The Kenyan shilling has remained relatively stable against the United States dollar. The exchange rate has largely hovered between KSh128 and KSh130 per dollar.
The stable trend began around August 2024 when the central bank reduced interest rates. The policy move helped stabilise financial markets and support economic activity.
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