The Kenyan shilling hit a six-month
high against the U.S. dollar on Monday as inflows
from diaspora remittances surged.
shilling stood at 100.38, data from the Central Bank
of Kenya released on Monday shows, the highest level
since Aug. 10, 2018, when it stood at 100.36.
Analysts attributed the surge to hard currency
inflows from diaspora remittances and offshore
investors’ buying government debt, coupled with thin
end-month dollar demand from oil importers.
According to the central bank, diaspora
remittances have been on the rise, up by 39 percent
in 2018 to 270 billion shillings (2.7 billion U.S.
dollars), and from 1.9 billion dollars of 2017.
The high remittances are attributed to increased
uptake of financial products by the diaspora due to
financial services firms, particularly banks.
The stronger shilling against the dollar has led
to a pile-up in forex reserves, which stood at 8.14
billion dollars, having risen by 135 million dollars
A stronger shilling means the apex bank does not
have to sell dollars to stabilize the local currency
in case it faces pressure from international
onshore forex bonds to support local currency
NAIROBI (Xinhua) --
Kenya is considering floating foreign
currency-denominated bonds locally in order to
support the Kenyan shilling, the country’s capital
market regulator said on Friday.
Paul Muthaura, CEO of Capital Markets Authority
(CMA), told journalists in Nairobi that the bonds
will lead to additional foreign currency inflows
into the country and strengthen the local currency.
"We are proposing the onshore foreign currency
bond because it will also provide government with
foreign currency to cater for the growing import
bill," Muthaura said during the release of ninth
volume of the Capital Markets Soundness Report for
the fourth quarter of 2018.
By issuing debt in foreign currency such as U.S.
dollars and euros locally, Muthaura said, Kenya will
solidify its position as an international financial
According to the Central Bank of Kenya, the
country’s foreign exchange reserves currently stand
at 816.4 billion shillings (8.13 billion U.S.
dollars), equivalent to 5.3 months of import cover.
Muthaura noted that the foreign currency debt
instruments will ensure the country has adequate
cover and buffer against short-term shocks in the
foreign exchange market.
Luke Ombara, director of regulatory policy at
CMA, said the government should also consider
issuing offshore local currency bonds so as to raise
funds in the international capital markets without
being exposed to foreign exchange rate risks and
Ombara said that a number of developing countries
such as Rwanda and India have already floated local
currency bonds outside of their countries.
He noted that ideal bourses to issue offshore
local currency-denominated bonds include the London
Stock Exchange and the Irish Stock Exchange.
The CMA official noted that currently the amount
of international funding channeled toward developing
countries and emerging economies continues to grow
and Kenya should take advantage of the trend to
raise funds in the international capital markets to
implement President Uhuru Kenyatta’s Big Four Agenda
on universal healthcare, affordable housing,
manufacturing and food security.
Ombara noted that the adoption of an appropriate
mix and balance of foreign currency debts and local
currency debts will ultimately promote the
development of local capital and financial markets,
further positioning Kenya as the heart of African
Kenya to issue
green bond by end of 2019
NAIROBI (Xinhua) --
Kenya is on course to issue a green
bond by end of 2019, a bankers’ lobby said on
Habil Olaka, CEO Kenya Bankers Association (KBA),
told journalists in Nairobi that the industry is
pushing for the floating of a green bond because it
"Looking at the environmental, social and
financial needs of both the country and the banking
sector there is no better instrument to achieve
sustainability like the green bond," Olaka during
the rebranding of Remu Microfinance Bank to Key
He said that given Kenya’s level of economic
development, it is prudent for the financial sector
to prioritize sustainability.
He noted that the green bond will be floated at
the Nairobi Security Exchange under the Sustainable
According to KBA, there are currently three
different initiatives that are working in parallel
to develop a green bond.
"Each of the initiatives have an equal chance of
producing Kenya’s first green bond," Olaka said.
He added said that either an individual bank or
several banks with a special purpose vehicle or a
client of bank will be supported to issue a green
bond which will be championed by the entire
He added that actual size of the green debt
instrument will be determined by the appetite of
Olaka said that the proceeds of the bond will go
towards purchasing green assets that will help Kenya
to mitigate or adapt to the effects of climate
The CEO said that the government is supporting
the issuance of green bonds through a number of tax