Experts Raise Concerns Over Possible Manipulation Behind Kenyan Shilling Stability

Kenya’s currency has maintained an unusual level of stability for more than a year, trading between Ksh.128 and Ksh.131 against the US dollar. While the government has described this as a sign of a strong economy, several experts now warn that the consistency may not be entirely natural.

Why Are Experts Questioning the Shilling’s Stability?

The Kenyan shilling’s performance has puzzled economists since early 2024. At the start of that year, the currency suffered a sharp decline, falling to over Ksh.160 per dollar in January. It then made a remarkable recover, rising to Ksh.144 by mid-February and later stabilizing around Ksh.127 in April 2024. Since then, the exchange rate has barely moved.

According to financial analysts, it is rare for a currency to remain this steady for such a prolonged period without some form of intervention. The International Monetary Fund (IMF) recently raised the issue during a visit to Nairobi.

“They were in town two weeks ago, and one of the things they told us is that the exchange rate is too stable… that they think it is interfering with the transmission and that it is interfering with inflation targeting,” Kenya Revenue Authority Chairperson Nderitu Muriithi told Citizen TV.

The IMF’s remarks have fueled speculation that the government could be managing the exchange rate to create a sense of economic stability.

What Are Economists Saying About the Shilling’s Stability?

Government economic advisor Dr. David Ndii dismissed suggestions of policy manipulation, insisting the current stability is not government-driven. “A lot of these debates and the IMF asking whether it is too stable or too unstable is basically witchcraft… but the policymaker has to be pragmatic,” Ndii said.

However, not everyone agrees. Churchill Ogutu, an economist with IC Group, believes the shilling’s steadiness cannot be explained by factors like increased diaspora remittances, portfolio inflows from infrastructure bonds, or access to Eurobond funds. “If you look at it all it just points to the stability being, or pointing to the management of the shilling to ensure that it is within the current level,” Ogutu explained.

Ogutu added that the apparent management could be aimed at guaranteeing certainty in external debt servicing, which remains a key pressure point for Kenya’s economy. Yet, he cautioned that the approach may not be sustainable. “Although in the short term the move may reduce imported inflation by managing imports, it may not hold in the long term,” he warned.

While the government continues to deny any deliberate manipulation, the debate reflects growing scrutiny over Kenya’s exchange rate policies as global and domestic economic pressures persist.

By Lucky Anyanje