World Bank Explains How Shilling Became Best Performing Currency Across 49 Countries
The World Bank, in its Africa Pulse Report released in April 2024, highlighted the Shilling as the top-performing currency in Sub-Saharan Africa.
Notably, the Kenyan currency saw the highest appreciation rate this year, reaching 16 per cent.
This surge in value was attributed to recent monetary policies introduced by the Central Bank of Kenya (CBK), which stimulated demand for the local currency.
Furthermore, Kenya’s participation in the Eurobond market in February was cited as a contributing factor to the Shilling’s strengthening against the Dollar.
The Zambian Kwacha was also noted as experiencing a similar upward trajectory alongside the Kenyan currency.
The report stated that the Kenyan Shilling had appreciated by 16 per cent this year, while the Zambian Kwacha had experienced a year-to-date appreciation of 2.4 per cent as of mid-March.
Both countries’ monetary authorities had increased interest rates to safeguard their currencies, with the Bank of Zambia additionally raising commercial banks’ reserve ratios. Kenya’s ability to secure funds for repaying its Eurobond due in June 2024 bolstered confidence and heightened demand for the local currency.
Another currency showing appreciation this year is the Malagasy Ariary from Madagascar.
However, the report also highlighted that several currencies continued to depreciate due to factors such as deficiencies in foreign reserves and mounting debt across many African nations.
The Nigerian Naira, in particular, has seen significant depreciation, with a year-to-date decline of about 41 per cent in the official market as of mid-March.
This depreciation was attributed to a backlog of accumulated foreign exchange demand on the official market, partly due to diminished Dollar flows stemming from decreased foreign investments and crude oil export receipts for the country.
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World Bank Explains How Shilling Became Best Performing Currency Across 49 Countries
