Shilling Unmoved as Dollar Rallies.
The Kenya shilling remained relatively stable on Wednesday following Donald Trump's victory in the US election, which triggered a sharp, one-day rally of the dollar against major world currencies.
While the euro, British Pound, Japanese yen, and Chinese yuan all recorded significant drops against the dollar, the shilling remained steady at around Sh129 to the US dollar, with uncertainty surrounding potential intervention by the Central Bank of Kenya (CBK) to maintain this level.
A global markets analyst attributed the dollar's strength to Trump's pro-business and soft taxation stance, which is considered favorable for companies.
The shilling's steadiness, despite the global trend, was attributed to significant inflows into the Kenyan market and the CBK's potential role as a buyer of dollars at the Sh129 level. Peer currencies, such as the Tanzanian and Ugandan shillings, Nigerian naira, and South African rand, have all experienced depreciation against the dollar.
The shilling's stability may delay the economic ramifications of Trump's victory for Kenyans, sparing them from price increases linked to a stronger dollar.
Analysts expect the dollar's strength to eventually reflect in the Kenyan shilling and markets, but with a significant lag in the near term.
Presidential Candidate Donald Trump’s win over Kamala Harris has boosted trades tied to a Republican win. This has spurred demand for smaller-cap stocks, crypto and sectors sensitive to Grand Old Party policies.
S&P 500 futures are up, Treasury yields are surging, and the dollar’s on track for its biggest win since 2020. S&P futures rose 1.2%, while US 10-year yields jumped to a four-month high of 4.44%.
Bitcoin (BTC) joined the rally, spiking by over 8% to hit a new record touching $75,000 for the first time. Investors were betting big on Trump’s win against Harris.
Reportedly, Bitcoin has delivered high post-election returns as it gained 87%, 44%, and 145% in 2012, 2016, and 2020, respectively.
Data shows that Japanese and Australian stocks climbed, while Hong Kong slipped. Nikkei 225 gained 2.46% while S&P/ASX 200 grew marginally.
The US Dollar Index (DXY) surged 1.3% as the dollar’s safe haven appeal kicked in amid election night volatility. The Mexican peso dropped 2.8%, while the yen and euro fell by over 1.5%. As the dollar rallied, metals like copper took a hit, while oil prices dipped.