Narrow range: How Kenyan shilling fared against US dollar, pound, euro in August
This story has significance for readers across Kenya and beyond.
- The Kenyan shilling traded within a narrow range against the US dollar throughout August 2026, supported by stable CBK policy
- The shilling weakened against the British pound by 1.18% between August 3 and August 21, 2026
- Kenya's foreign exchange reserves have stood over USD 15.2 billion, equivalent to 6.3 months of import cover, during the period
The Kenyan shilling held largely steady against the US dollar throughout August 2026.
On the other hand, the Kenyan shilling lost modest ground against the British pound and recorded a mixed performance against the euro, according to Central Bank of Kenya trade-weighted indicative rates.
The currency traded between KSh 129.23 and KSh 129.54 per dollar during the period, opening at KSh 129.44 on August 3 and closing at KSh 129.47 on August 21, a net weakening of just 0.02%.
The CBK's Monetary Policy Committee held the Central Bank Rate at 8.75% at its August 11 meeting, citing stable inflation expectations, improving private-sector credit growth, and shilling stability as justification for leaving rates unchanged.
Shilling vs Euro and Pound
Against the euro, the shilling depreciated 1.27%, moving from KSh 149.31 on August 3 to KSh 151.20 on August 21.
The euro traded within a range of KSh 148.97 to KSh 151.20 over the period. Trading Economics data placed the EUR/KES rate at 149.19 on August 11, down 0.12% from the previous session, with the euro having weakened 1.11% against the shilling over the past year.
Against sterling, the shilling slipped 1.18%, from KSh 174.41 on August 3 to KSh 176.48 on August 21.
The pound traded between KSh 174.16 and KSh 176.48, supported by resilient UK services-sector activity and the Bank of England's comparatively hawkish monetary policy stance.
What Is Supporting the Shilling
Several structural factors underpinned the shilling's relative resilience. Kenya's foreign exchange reserves reached USD 15.245 billion as of mid-August, covering 6.3 months of imports and comfortably exceeding the CBK's statutory floor of four months.
Diaspora remittances rose sharply in July, climbing 16.2% to USD 436.6 million from USD 375.6 million in June, adding to the currency's external support.
The domestic money market remained liquid during the week ending August 13, with commercial banks carrying excess reserves averaging KSh 17.8 billion above the 3.25% Cash Reserve Ratio requirement.
Average commercial bank lending rates have also declined, contributing to a pickup in private-sector credit growth.
Risks Ahead for the Currency
Despite the steady performance, risks to the outlook persist, according to Daniel Kathali, an economist.
"Oil price volatility linked to Middle East conflict and disruptions to shipping routes through the Strait of Hormuz could widen Kenya's import bill and pressure the exchange rate. Additionally, Kenya's public debt, projected at 65.6% of GDP in present-value terms for 2026, sits above the government's long-term benchmark of 55%, a level the CBK classifies as carrying a high risk of debt distress, which could impact the shilling in the long-term," Kathali opined.
In the short term, the shilling is expected to trade below KSh 130 per dollar by the end of the third quarter of 2026.
Further strengthening is also foreseen in the next 12 months, contingent on continued fiscal consolidation and sustained remittance inflows.
Source: TUKO.co.ke
Reporting originally appeared via TUKO. Read the full source for additional context.