Kenya Shilling to Strengthen, Foreign Exchange Executives Say
March 07, 2018
Bloomberg convenes over 100 FX executives in Nairobi to discuss key industry issues
More than 100 FX executives met to discuss issues including consolidation of banks, interest rates, counterparty risks and the latest financial technology at Villa Rosa Kempinski Nairobi on February 21. Bloomberg asked attendees about local and global currency topics:
Poll results showed that 79 percent of the respondents believe that the Kenyan Shilling/US Dollar (KES/USD) exchange rate will strengthen to between 101 and 105, by the end of 2018. Only 13 percent believe it will rise above 105, and only eight percent believe it will slump below 100.[/vc_column_text]
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[vc_column_text]Domestic monetary policy is the biggest macro issue affecting the Kenyan Shilling in 2018, said 35 percent of the respondents. About 26 percent said geopolitical changes and instability will affect the KES the most, while 20 percent believe the local economy will have the biggest effect. Only nine percent say the global economy will significantly affect the KES.[/vc_column_text]
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[vc_column_text]When it comes to the FX Global Code of Conduct, the majority (69 percent) 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 said they will not endorse the Code.[/vc_column_text]
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[vc_column_text]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.
One bright spot in FX is that banks have been aggressively deploying new technology to reduce operational costs. Half of those polled said that ‘most’ of their FX trading is done electronically and another quarter said that all of their FX transactions are e-trades. Only 14 percent said ‘some’ and even fewer (10 percent) said ‘none’ of their trading is done electronically.[/vc_column_text]
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[vc_column_text]The forum was sponsored by Bloomberg FXGO, a multi-bank FX trading platform for execution of spot, outright, swap, NDF, deposit, and option transactions. It is included in the Bloomberg Terminal subscription.[/vc_column_text]
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