Kenyan finance minister sees FX, tourism boost from Obama visit
22 July 2015, 17:03
Nairobi - Kenya's shilling is likely to strengthen against the dollar due to an anticipated recovery in tourism and the positive sentiments around President Barack Obama's visit, Finance Minister Henry Rotich said on Wednesday.
The shilling is hovering near 3 1/2-year lows against the dollar and is down 10 percent so far this year, mainly due to a firmer dollar, a surge in imports and lower tourism earnings after a number of Islamist militant attacks in East Africa's biggest economy that scared visitors away.
Rotich said holiday bookings and inquiries had been rising ahead of this weekend's visit by Obama, pointing to a potential recovery in the sector in the months ahead.
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"All these obviously will boost tourism and give more support to the exchange rate and we see the (weakening) trend that has happened over the last few months reversing because of the positive developments with the visit," he told reporters.
Data from the Kenya Tourism Board shows visitor numbers fell to 284,313 from 381,278 in January to May 2014, a drop of 25.4 percent.
Obama is scheduled to arrive in Nairobi for an entrepreneurship conference on Friday, the first ever visit by a sitting U.S. president to Kenya.
Top hotels in Nairobi have been fully booked for the duration of the conference.
Rotich said the country's economy was likely to reap a dividend from the visit.
"It is going a long way to support the foreign exchange because of the positive sentiments, the inflows that are coming in, the tourists and the general investor confidence which helps in reversing any expectation about the future of our economy," the minister said.
Policymakers have raised the benchmark lending rate by 300 points since June to stabilise the currency and stave off inflation. They are set to meet again on Aug. 5, a month ahead of schedule.
Foreign exchange traders say the shilling is likely to remain under pressure for a while as Kenya's imports rise due to key infrastructure projects such as a modern railway whose first phase of construction will end in 2017.