Sanlam analysts expect the shilling, which was generally immune to volatility in 2018 when it appreciated 1.3 per cent against the US dollar, to lose ground this year. “In our view, the Kenya shilling is susceptible to downward pressure from negative sentiment due to persistent fiscal concerns,” the analysts say in an outlook brief. Last year, the shilling, backed by sufficient foreign exchange reserves and open market operations, generally exchange against the dollar between 99.9778 and 103.4 in a period of 12 months. Growth forecastIn spite of the negative sentiments about the country’s fiscal pressures, the Sanlam analysts expect the extension of tax amnesty inflows and diaspora remittances to mitigate pressure on the shilling. “However, we believe the authorities (Central Bank of Kenya) will likely seek to limit significant shilling volatility given its rising external debt,” the Sanlam brief concludes.
Source: Daily Nation January 12, 2019 09:22 UTC