The Kenyan shilling remained stable this week, supported by increased foreign exchange inflows from the country’s tourism sector and tea exports, which are helping to counteract pressures from rising import bills and global economic uncertainties.
The tourism industry, a vital contributor to Kenya’s economy, has seen a strong resurgence this year, bringing in significant foreign currency as international arrivals continue to climb. Coastal destinations like Mombasa and Diani have reported high occupancy rates, with tourists drawn by Kenya’s wildlife, culture, and warm climate. According to the Kenya Tourism Board, the number of visitors has nearly returned to pre-pandemic levels, injecting crucial foreign currency into the economy and stabilizing the shilling.
The tourism industry’s performance has been robust, and we’re seeing a return to Kenya’s position as a top travel destination. This revival has provided essential support to the shilling in the face of other economic challenges, said a senior economist from the Central Bank of Kenya.
Tea exports, another pillar of Kenya’s economy, have also provided substantial support to the shilling. Kenya is one of the world’s leading tea exporters, and strong demand from countries like Pakistan, Egypt, and the UK has driven consistent sales. Favorable weather conditions have also contributed to a bountiful harvest, allowing Kenya to maintain high export volumes and strengthen foreign exchange reserves.
In September alone, Kenya exported over 50 million kilograms of tea, up by 8% year-over-year. With global tea prices holding steady, the export sector’s strong performance has further helped cushion the shilling against volatility in other markets.
Despite the support from tourism and tea exports, the shilling still faces pressures due to rising import costs, particularly for fuel and essential goods, which continue to weigh on the currency. Inflationary pressures and high borrowing costs have added to the strain on Kenya’s economy, prompting analysts to call for further diversification of foreign exchange sources.
Nevertheless, the strong performance in tourism and tea exports offers a positive outlook for the shilling as the year ends. The Central Bank of Kenya remains optimistic that these sectors will continue to provide vital support to the currency, helping to keep it steady amid global economic uncertainties.
