By Benadeta Mwaura - Reporter
Kenya, July 9, 2026 - The Kenyan shilling is expected to strengthen modestly against the U.S. dollar over the coming week, supported by steady inflows of diaspora remittances that continue to bolster the country's foreign exchange reserves despite sustained demand for dollars from importers.
Currency traders say the local unit is likely to remain resilient after trading at 129.15/129.35 against the U.S. dollar on Thursday, a slight improvement from 129.20/129.40 recorded a week earlier. The outlook positions the shilling among Africa's better-performing currencies at a time when several regional peers are facing depreciation pressures.
The expected appreciation comes as remittances from Kenyans living abroad continue to provide a steady supply of foreign currency into the domestic market, helping offset demand from importers paying for fuel, machinery, pharmaceuticals and other goods.
Diaspora remittances have become one of Kenya's largest sources of foreign exchange, alongside tourism, tea, horticulture and other exports. The inflows have played an increasingly important role in stabilising the exchange rate during periods of external shocks and global market volatility.
The continued strength of remittance inflows has helped cushion the shilling from pressures that might otherwise arise from higher import bills and global geopolitical uncertainties, including renewed tensions in the Middle East that have unsettled international oil markets.
The positive outlook also reflects improving confidence in Kenya's macroeconomic fundamentals following months of relative exchange rate stability.
The Central Bank of Kenya has maintained adequate foreign exchange reserves while pursuing monetary policies aimed at preserving price stability and safeguarding the value of the shilling. Earlier this year, CBK Governor Kamau Thugge said the country had accumulated sufficient foreign exchange reserves to manage currency volatility arising from external shocks.
Across Africa, however, the currency outlook remains mixed.
In Ghana, traders expect the cedi to remain under pressure due to strong corporate demand for foreign currency and continued oversubscription of foreign exchange auctions, signalling persistent demand for U.S. dollars. Market participants say there are few indications that these pressures will ease in the near term.
The Ugandan shilling is also forecast to weaken as declining hard-currency earnings from coffee exports coincide with rising importer demand, particularly from the energy sector. Reduced commodity export receipts have limited the availability of foreign exchange in Uganda, placing downward pressure on the local currency.
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In Nigeria, the naira is expected to trade within a narrow range, supported by continued interventions from the Central Bank of Nigeria and sustained foreign currency inflows attracted by relatively high yields on government Treasury securities.
Meanwhile, Zambia's kwacha is projected to remain broadly stable, with traders citing increased demand for the local currency ahead of corporate tax obligations, including Value Added Tax (VAT) and Withholding Tax payments.
For Kenya, a stable or stronger shilling could help ease imported inflation by reducing the cost of purchasing goods priced in U.S. dollars, particularly petroleum products, industrial raw materials and essential food imports.
A firmer currency also lowers the cost of servicing foreign-denominated debt and can improve business confidence by reducing exchange rate uncertainty.
However, economists caution that the gains could remain modest, as the shilling continues to face competing pressures from importer demand and global market risks. Rising international oil prices, shifts in U.S. monetary policy and geopolitical developments could still influence currency movements in the weeks ahead.
Nevertheless, the continued resilience of diaspora remittances reinforces their growing importance to Kenya's economy.
Beyond supporting millions of households, the inflows have become a critical source of foreign exchange, helping stabilise the shilling, strengthen external balances and support overall macroeconomic stability at a time of heightened global uncertainty.