NAIROBI, Kenya, Jan 18 – The Kenyan shilling value will continue to depreciate against the American dollar this year, albeit at a much slower pace than in 2023, Sanlam Investments foresees.
According to the Sanlam Investments East Africa Limited (SIEAL) 2024 Investment Outlook report, the local unit, which hit the 160 mark early this week against the greenback, will lose value in a gradual manner compared to last year, which fell by about 21 percent.
Dan Gathogo, Deputy Chief Investment Officer at Sanlam Investments, said that the devaluation phenomenon is also impacting other currencies in the East African region.
He stressed that the devaluation poses a big risk to investments.
“The biggest risk in investments is currency depreciation in the economy as well as availability of Forex in the country. There will be depreciation but to a lesser extent as compared to 2023,” said Gathogo.
The fund manager also projects Kenyan government securities interest rates to remain elevated in 2024, driven by the increase of the Central Bank rate in December 2023, the funding requirements of the government, and a lag in tax collection.
It, however, stated that interest rates will start to ease off this year due to the country’s financial support from lending partners, including the World Bank and the International Monetary Fund (IMF).
“We expect the shilling to depreciate in 2024 but face less pressure than 2023 as the Central Bank of Kenya has increased interest rates and US interest rates are projected to decline,” he added.
