The Kenyan Shilling weakened against several major global currencies during the third quarter of 2025, according to the latest GDP and Macroeconomic report released by the Kenya National Bureau of Statistics (KNBS).
While the shilling gained marginally by 0.2% against the U.S. Dollar, it lost value against other key currencies: 6.2% against the Euro, 3.6% against the Pound Sterling, 0.7% against the Japanese Yen, and 1.6% against the South African Rand.
In contrast, the local currency showed resilience within the region, appreciating 5.8% against the Tanzanian Shilling and 4.1% against the Ugandan Shilling over the same period.
The report attributes the mixed performance to moderate inflation, which rose slightly to 4.42% in Q3 2025, up from 4.08% in the same quarter of 2024, largely driven by higher prices for food and soft drinks.
Monetary policy adjustments also influenced the shilling’s performance. The Central Bank Rate (CBR) was reduced from 9.75% in July 2025 to 9.50% in August and September, down from 12.75% in September 2024, aiming to stimulate lending to the private sector.
Meanwhile, foreign exchange reserves strengthened, with net foreign assets rising 2.7% to Ksh948.2 billion, supported by increased holdings at the Central Bank of Kenya (CBK).
Despite these gains, depreciation against major global currencies could raise the cost of imported goods, including fuel, machinery, and electronics, potentially affecting consumer prices.
The current account deficit also widened sharply, from Ksh43.5 billion in Q3 2024 to Ksh135.3 billion in Q3 2025, which could place additional pressure on the shilling in the coming months.
On a positive note, the Nairobi Securities Exchange (NSE) performed strongly, with the NSE 20 Share Index rising from 1,776 points in September 2024 to 2,973 points in September 2025, reflecting increased investor activity despite currency volatility.
Sectoral growth remained steady, with agriculture, construction, manufacturing, transport, and financial services contributing to an overall GDP growth of 4.9% in Q3 2025, up from 4.2% in Q3 2024.
The shilling remained relatively stable against both major international and regional currencies towards the end of the year. On December 31, 2025, the shilling traded at Ksh129.01 per U.S. Dollar, supported by strong foreign exchange reserves of Ksh1.6 trillion (USD 12,394 million), equivalent to 5.3 months of import cover.
Tags
News