At a gathering of more than 100 foreign exchange executives last month, polling showed that the Kenyan shilling is widely expected to gain this year. Results from a high-level survey of the executives in attendance at the Bloomberg FX18 forum see the sub-Saharan African currency gaining support on the heels of the country’s recent presidential election.
Forum delegates included foreign exchange executives who met to discuss issues including the state of bank consolidation, interest rates, and counterparty risks. Delegates were polled exclusively by Bloomberg and asked about a range of both local and global currency topics.
Results showed that 79 percent of the respondents see the Kenyan Shilling/US Dollar (KES/USD) exchange rate will strengthening to levels between 101 and 105 by the end of 2018. 13 percent believe it will rise head higher above 105, and only eight percent seeing a dip below 100.
Domestic monetary policy remains the major macro issue affecting the Kenyan currency in 2018, according to 35 percent of the polled respondents. About 26 percent said geopolitical changes and instability will affect the shilling the most, and some 20 percent believe the local Kenyan economy will have the greatest impact. Only nine percent say the global economy will significantly affect the shilling.
Regarding the FX Global Code of Conduct, the majority (69 percent) of delegates said they are reviewing the guidelines. Another 18 percent said they are already implementing training and nine percent said they have signed the Code’s letter of commitment. Only four percent stated said they have no intention of endorsing the Code.
In panel discussions, attendees discussed major consolidation trends in banking, with small banks either merging or being bought out owing to capital adequacy concerns. New government legislation to cap interest rates is another issue, as banks are negatively affected and private sector credit has dried up.
The forum, which was sponsored in part by Bloomberg FXGO brought together an audience of market professionals in Nairobi, Kenya, in February. FXGO is a leading professional multi-bank foreign exchange trading platform built for the seamless execution of spot, outright, swap, NDF, deposit, and option transactions.
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