Japhet Ruto, a journalist at TUKO.co.ke, has over eight years of experience in finance, business, and technology, providing in-depth analysis of economic trends in Kenya and globally.

Treasury Cabinet Secretary (CS) John Mbadi has said the government would not allow the Kenyan shilling to appreciate further in value relative to the United States (US) dollar.

Speaking on Thursday, March 27, before the National Assembly's Budget and Appropriations Committee, Mbadi pointed out that a stronger shilling might deter exports.

The CS noted that a decline in exports could impact foreign exchange reserves and make the country more vulnerable economically.

"We believe that the shilling at 130 units is the most appropriate for our economy since too much strength discourages exports, so we cannot allow it to appreciate too much," Mbadi explained.

"You won't have foreign exchange reserves if you hinder exports, and you'll be more vulnerable since you won't be able to pay your loans," he added.

He added that to benefit both importers and exporters, the government has been working to stabilise the value of the local currency against the greenback.

A stronger shilling benefits importers by lowering import expenses and ensuring price stability.

However, FX Pesa lead market analyst Rufas Kamau indicated that a stronger local currency hurts exporters because the price of goods being exported increases.

"It is anticipated that Kenyan exporters' businesses will suffer as a result of the shilling strengthening. A strong shilling makes Kenyan goods expensive in international markets," Kamau told TUKO.co.ke.

According to the Central Bank of Kenya (CBK), the shilling exchanged at 129.3 against the US dollar on Friday, March 28.

Chris Kiptoo, the Principal Secretary of the National Treasury, stated that if CBK stops purchasing dollars, the value of the shilling could continue to increase.

In January 2024, the local currency was worth KSh 160 per US dollar. By 2025, it had appreciated to an average of KSh 129 per US dollar.

PS Kiptoo highlighted that the CBK would be able to quit purchasing dollars on the open market if the shilling remains stable.

He noted the local currency could trade at 100 against the greenback if the regulator stopped buying dollars.

Kenya's foreign exchange reserves hit a three-month-high at KSh 1.3 trillion worth of dollars on strong shilling.

According to CBK, this supports importers' demand for US dollars and amounts to 5.1 months of import cover.

After an upsurge in dollar demand was recorded in February 2025, the regulator sold dollars to traders.

Source: TUKO.co.ke