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USD/KES forecast: Kenyan shilling’s rout against the dollar extends as East Africa’s largest economy falters

By Nicole Willing

Edited by Georgy Istigechev

14:23, 2 November 2022

KES has shed 7.3% against USD since the start of 2022 – Photo: Herr Loeffler /

The Kenyan shilling (KES) is trading at record lows against the US dollar (USD). Rising US interest rates have seen the strong dollar exert heavy pressure on emerging markets' currencies.

The KES has shed 7.3% against the dollar since the start of 2022. Kenya’s central bank has responded by selling off some of its foreign currency reserves in an attempt to prop up the shilling.

What is the outlook for the USD/KES forecast for the rest of 2022 and the coming years?

We look at the recent performance of the dollar against the shilling and the latest forecasts for the exchange rate.

What drives USD/KES?

In foreign currency trading, the USD/KES pair refers to the number of Kenyan shillings that one US dollar can buy. The shilling is the quote currency and the dollar is the base currency.

The Kenyan shilling has been the national currency of Kenya since 1966, when it replaced the East African shilling that had circulated under British rule. As one of the more stable East African currencies, the KES is also in circulation in nearby countries such as Sudan and Somalia as a store of wealth rather than their local national currencies.

The shilling’s value is driven by economic activity in Kenya, its trade balance and monetary policy set by the Central Bank of Kenya. 

Kenya is one of the world's largest exporters of agricultural products including tea, coffee and cut flowers. According to the US International Trade Administration, high rainfall areas account for 70% of the country’s commercial agricultural output against just 10% of its arable land, so the weather can have an important influence on its production. 

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USD/KES rises to record on dollar strength

Kenya relies heavily on imports of oil products, palm oil and machinery, so international commodity prices and the value of the US dollar have an impact on its trade balance. Most commodities are traded in US dollars, increasing the cost of imports when the dollar’s value rises. 

Soaring crude oil prices – such as those of Brent crude (up 21.7% year-to-date) and West Texas Intermediate (up 17.3% year-to-date) – due to the Russia-Ukraine conflict and the strong dollar have increased the cost of imports into Kenya, contributing to high inflation

Kenya’s inflation rate rose to 9.18% in September, up from 8.53% in August and its highest level since June 2017, according to the country’s central bank.

As the world’s reserve currency, the US dollar has soared in value in 2022, with investors seeking safe haven from geopolitical and macroeconomic uncertainty, and the US Federal Reserve aggressively raising interest rates to address high inflation. US inflation was 8.2% in September, down from a 40-year high of 9.1% reached in June.

The USD/KES exchange rate started this year at 113.05 shillings to one dollar. The pair was relatively stable until February, when the dollar accelerated its rally in response to the Russian invasion of Ukraine.

The pair has since been in a strong upward trend, hitting 115 in April after the Fed began raising interest rates in March and reaching 120 in September with the Fed’s third consecutive 75 basis point hike on 22 September.

Kenya’s central bank followed by raising its benchmark interest rate by 75 basis points to 8.25% on 29 September – more than the 50 basis point hike that the markets had expected. It was the bank’s second hike since May 2022, when the rate increased by 50 points to 7.5%.


1.29 Price
-0.110% 1D Chg, %
Long position overnight fee -0.0046%
Short position overnight fee -0.0036%
Overnight fee time 21:00 (UTC)
Spread 0.00013


0.66 Price
-0.350% 1D Chg, %
Long position overnight fee -0.0065%
Short position overnight fee -0.0017%
Overnight fee time 21:00 (UTC)
Spread 0.00006


0.66 Price
-0.350% 1D Chg, %
Long position overnight fee -0.0065%
Short position overnight fee -0.0017%
Overnight fee time 21:00 (UTC)
Spread 0.00006


1.08 Price
-0.040% 1D Chg, %
Long position overnight fee -0.0087%
Short position overnight fee 0.0005%
Overnight fee time 21:00 (UTC)
Spread 0.00006

The USD/KES reached an all-time high of 121.30 on 28 October as the dollar strengthened ahead of the anticipated fourth 75 basis point interest rate hike on 2 November and oil prices moved higher. Demand for dollars from the oil, energy and manufacturing industries has increased in recent months. 

The Central Bank of Kenya (CBK) has been intervening in the currency market, selling foreign exchange reserves and buying back shillings. The CBK’s usable forex reserves fell to $7.29bn, as of 27 October, down from $7.4bn in late September and $8.8bn at the start of the year.

Remittances from Kenyan citizens who work abroad are one of the country’s main sources of forex, which can also influence the USD/KES rate.

How is the USD/KES pair expected to trade in the future? Will the US dollar reach fresh highs or can the shilling stabilise?

USD/KES forecasts: Analyst views

Analysts at Kenyan asset management firm Cytonn wrote in their October USD/KES forecast that they “expect the shilling to remain under pressure in 2022” as a result of high global crude oil prices, a persistent Kenyan current account deficit and rising government debt.

Cytonn’s analysts highlighted the impact of the debt on Kenya’s foreign currency reserves, saying:

[The debt] continues to put pressure on forex reserves given that 68.1% of Kenya’s debt [was] US Dollar denominated as of July 2022.” 

At the same time, analysts saw support for the shilling from the central bank’s forex reserves at 4.2 months of import cover – above the statutory requirement of 4.0 months – and sufficient diaspora remittances, which increased by 14.7% year-over-year to $3.99bn, as of August 2022.

The US dollar to Kenyan shilling forecast from TradingEconomics on 2 November showed the pair edging up to fresh highs of 121.470 by the end of this quarter and 121.979 in one year, based on global macro model projections and analysts’ expectations.

The USD/KES prediction from Gov.Capital projected that the pair could rise to 122.499 by the end of 2022, potentially reaching 133 in a year’s time.

The USD/KES forecast for 2022 from algorithm-based forecaster Wallet Investor showed the pair dipping to 120.408 by the end of the year. But over the longer term, the USD/KES forecast for 2025 indicated that the pair could rise to a new record high of 138, up from 126 at the end of 2023.

As currency markets are highly volatile and strongly influenced by current events, analysts have yet to issue a USD/KES forecast for 2030.

When considering any USD/KES forecast to inform your trading strategy, you should keep in mind that high volatility makes it difficult for analysts and algorithm-based forecasters to come up with accurate long-term predictions.  

We recommend that you always do your own research before opening a trade. Look at the latest market trends, news, technical and fundamental analysis, and expert opinions before making any investment decision.

Keep in mind that past performance is no guarantee of future returns. And never invest or trade more than you can afford to lose.


Why has USD/KES been rising?

The US dollar has climbed to a record high against the Kenyan shilling on rising US interest rates and pressure on the shilling from rising commodity import costs.

Will USD/KES go up or down?

The direction of the US dollar against the Kenyan shilling will depend on monetary policy in Kenya and the US, inflation rates, commodity prices and Kenya’s foreign exchange reserves.

When is the best time to trade USD/KES?

The best time to trade on forex markets is around the release of major economic announcements, such as trade data, inflation and interest rates.

Is USD/KES a buy, sell or hold?

How you trade the USD/KES pair is a personal decision depending on your risk tolerance and investing strategy. You should do your own research to take an informed view of the market. 

Remember, past performance does not guarantee future returns. And never trade with money you cannot afford to lose.

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You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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