Exporters face diminished earnings amid a robust shilling that has experienced a notable upswing in the past couple of days, concluding a protracted period of depreciation against the US dollar.

Over the last 18 months, exporters have benefited from a robust dollar, favouring outbound shipments but adversely affecting imports by escalating costs.

The shilling’s current strengthened position against the US dollar, since Tuesday, is attributed to renewed investor confidence following substantial inflows for servicing the $2 billion Eurobond debt.

Kenya witnessed a substantial surge in horticulture earnings last year, reaching Ksh157 billion, up from Ksh147 billion the previous year.

The appreciating shilling is also poised to impact coffee and tea traders who have experienced favorable returns due to the weakened local currency in the past year.

Kenya predominantly exports more than 90 percent of its coffee and tea internationally, with only a minimal fraction allocated for domestic consumption. These commodities are transacted in dollars at the Mombasa Tea Auction and the Nairobi Coffee Exchange.

Since the start of the current crop year in October, coffee farmers have enjoyed robust returns, attributed to favourable foreign exchange rates. Notably, the price of coffee surged by 62 percent in the latest s sale, reaching $8 million compared to $5 million in the preceding sale.

The shilling has demonstrated a consistent uptrend over the past nine days, extending its gains against the US dollar. Banks are currently quoting the local currency at an average of 154, down from the previous week’s high of 165 against the greenback.

A statement from the National Treasury on Tuesday indicated strong demand for the latest Eurobond, with the high-quality order book surpassing $6 billion.

Additionally, the Kenyan shilling has appreciated against East African currencies, including the Tanzanian and Ugandan shillings.

Having lost over 20 percent of its value since 2022, the Kenyan shilling’s recent gains alleviate pressure on imports, potentially mitigating the high cost of living.

gandae@businessdayafrica.org