The Kenyan Shilling has defied macroeconomic gravity, maintaining a rock-solid stability against the US Dollar and regional currencies even as the country's foreign exchange reserves took a $258 million (KES 33.3 billion) hit in the third week of January 2026.

According to the Central Bank of Kenya’s (CBK) latest weekly bulletin, the local unit traded at an average of 129.02 against the greenback on Thursday, January 22, virtually unchanged from 129.03 the previous week. This stability comes as a relief to importers and consumers alike, signaling that the volatility of previous years may be firmly in the rearview mirror.

Reserves Take a Hit

While the currency held its ground, the national savings account saw a slight contraction. The CBK reported that foreign exchange reserves dropped from $12,477 million (KES 1.61 trillion) to $12,219 million (KES 1.57 trillion). Despite this dip, the reserves remain robust, providing a comfortable 5.3 months of import cover—well above the statutory requirement of 4 months and the East African Community’s convergence criterion of 4.5 months.

What’s Driving the Stability?

• Diaspora Remittances: Inflows from Kenyans abroad continue to provide a steady supply of dollars, cushioning the shilling against external shocks.
• Tight Monetary Policy: The CBK’s disciplined approach has successfully mopped up excess liquidity, keeping inflation within the target range.
• Regional Dominance: The shilling also gained ground against the Ugandan Shilling and Tanzanian Shilling, reaffirming Nairobi’s status as the region’s financial powerhouse.

The "Ruto Dividend"

President William Ruto recently hailed Kenya’s economic resilience, noting that the country had avoided the debt distress that befell other African nations. "We have organized our affairs well," he stated, pointing to the stable exchange rate as proof of effective governance.

However, analysts warn that the drop in reserves, though manageable, bears watching. With heavy debt service obligations due later in the year, the CBK will need to balance defending the shilling with preserving its war chest. for now, however, the shilling is standing tall.