The Kenyan shilling (KES) is the official currency of the Republic of Kenya. It is utilized widely in Kenya, and to some extent in Sudan and Somalia, though the latter two have their own official currencies—the Sudanese Pound and the Somali Shilling. Each Kenyan shilling is subdivided into 100 cents, often abbreviated as KSh (e.g., ‘100 KSh’ refers to 100 shillings). In foreign exchange (FX) trading, its symbol is KES.
Key Insights
- The Kenyan shilling (KES) is recognized as the official currency of Kenya and finds limited use in Sudan and Somalia.
- KES stands among the most stable currencies in East Africa.
- Neighboring countries sometimes use the KES as a reliable means to store value.
Understanding the Kenyan Shilling (KES)
As of Dec. 28, 2023, USD $1 equates to approximately 157 KES. Historically speaking, the KES/USD exchange rate was about 75 shillings per U.S. dollar in 2009. Over the subsequent years, unprecedented public debt resulted in a weakened exchange rate, peaking at around 104 shillings per dollar in 2015 and 2017. From 2016 onwards, the rate has hovered near the 100-mark, reflecting emerging concerns over Kenya’s rising debt.
The Kenyan shilling was initially introduced in 1966, taking over from the East African shilling that circulated in British-controlled regions of East Africa. As of 2018, due to constitutional changes prohibiting portraits of individual people, Kenya initiated new banknotes and coins devoid of such images.
The Central Bank of Kenya manages the national currency and allows it to float freely in the global forex market. It operates under a mandate aimed at maintaining price stability, ensuring liquidity in the financial system, and fostering economic growth and employment.
KES and Kenya’s Economy
The relative value of the Kenyan shilling is largely determined by the demand for shilling-denominated assets, driven by both individual and institutional perspectives on the economic stability and growth potential of Kenya.
According to the World Bank, Kenya witnessed impressive economic growth rates, with an annual GDP increase of 5.8% in 2016, making it one of the fastest-growing economies in Sub-Saharan Africa. This growth, fueled by tourism and significant investment in infrastructure, did experience a slight decline to 5.4% by 2019.
World Bank data further indicates that between 2006 and 2016, Kenya’s gross national income per capita doubled, while its GDP more than doubled from $25.8 billion to $70.5 billion. However, alongside these positive figures, public debt also rose from about 40% of GDP in 2013 to 60% by the period’s end.
M-Pesa: Revolutionizing Banking in Kenya
M-Pesa is a widely adopted mobile banking service in Kenya that simplifies the process of storing and transferring money via mobile phones. Launched by Safaricom, the largest mobile operator in Kenya, in 2007, M-Pesa blends ‘M’ for mobile with Pesa (meaning money in Swahili).
Funds collected through M-Pesa are deposited in protected bank accounts held by Safaricom. These accounts are treated as standard checking accounts and are insured up to a maximum of 100,000 KES (around $1,000) by the Deposit Protection Fund.
Related Terms: Forex Trading, M-Pesa, Exchange Rate, Kenyan Economy.
References
- Small World Money Transfer. “What’s the Currency in Kenya and What is Its History?”
- Xe. “SOS - Somali Shilling”.
- Xe. “SDG - Sudanese Pound”.
- Xe. “KES - Kenyan Shilling”.
- Currency Converter. “USD KES Exchange Rate on 26/12/2009”.
- Currency Converter. “USD KES Historical Exchange Rate”.
- Xe. “US Dollar to Kenyan Shilling Exchange Rate Chart”.
- Xe. “Kenyan Shilling to US Dollar Exchange Rate Chart: 10Y View”.
- Howard M. Berlin. “World Monetary Units, An Historical Dictionary, Country by Country”, Page 87. McFarland and Company, Inc., Publishers, 2008.
- Central Bank of Kenya. “Designs for New Kenyan Currency”.
- Central Bank of Kenya. “Currency Services”. Select Dropdown Currency in Circulation.
- Central Bank of Kenya. “Currency Services”.
- Central Bank of Kenya. “Forex”.
- Central Bank of Kenya. “Monetary Policy”.
- The World Bank. “The World Bank in Kenya”.
- The World Bank. “Data—Kenya”.
- Vodaphone Group. “M-Pesa”.
