Diaspora inflows shield the shilling from Israel, Iran war

The Kenyan shilling defied the ongoing conflict in the Middle East, pitting Israel and Iran to remain stable against major international and regional currencies during the week ending June 19.

The local currency traded Sh129.24 units against the US dollar compared to Sh129.28 the previous week. This is despite global oil prices surge due to escalating conflict between Israel and Iran, growing fears over likely closure of Strait of Hormuz, a key oil trade route.

The Central Bank of Kenya in the weekly bulletin attributed the shilling’s stability to steady growth in remittance inflows, which continues to support the current account position and stability in the foreign exchange market.

Remittance inflows totalled $440.1 million (Sh56.9 billion) in May 2025, representing a 4.1 per cent increase from the $422.9 million (Sh54.6 billion) recorded in April.

The cumulative inflows for the 12 months to May 2025 increased by 11.6 per cent to $5.033 billion (Sh60.4 billion) compared to $4.51 billion (Sh583.1 billion) in the corresponding period of 2024.

In the equities markets, Uganda’s electricity distributor, Umeme, a cross-listed entity on both the Uganda Securities Exchange and the Nairobi Securities Exchange, has seen its stock drop 26 per cent since trading resumed mid this month.

The drop comes after a two-month suspension tied to the end of its 20-year power distribution concession with the Government of Uganda. Shares fell from Sh16.00 on March 28 to Sh11.90 by June 19.

The plunge was further triggered by the firm’s poor performance in the financial year ended December 31. Umeme reported a net loss of USh511 billion and no final dividend.

Investors remain cautious amid ongoing uncertainty around the unresolved $292 million Buyout Amount, which Umeme is pursuing through international arbitration.

Trans Century, a company engaged in power, transport, infrastructure and engineering industries across Africa, suffered a near seven per cent drop in share price on Friday following its tiff with Equity Bank over Sh7 billion debt.

The court tussle that culminated into a near drama as administrators appointed by Equity Bank stormed the firm and its subsidiary, East African Cables saw a commercial court intervene, allowing administrators to take charge up to July 24.

Meanwhile, the broader NSE market has also retreated after an exceptional rally last week. The NASI closed at 144.62 on June 19, slightly up 0.17 per cent from the day before, but still below last Thursday’s peak of 147.83.

The pullback reflects mild profit taking after three consecutive sessions of gains earlier in the month.

Market capitalisation, equity turnover and total shares traded decreased by two per cent, 3.6 per cent, and 12.7 per cent, respectively.

Meanwhile, government papers continued to attract investors despite low yields, with the Treasury bill auction of June 19 receiving bids worth Sh27.4 billion against an advertised amount of Sh24.0 billion, representing a performance of 114.2 per cent.

During the Treasury bond auction of June 18, the reopened 15-year and 30-year treasury bonds received bids totaling Sh101.4 billion against an advertised amount of Sh50 billion, representing a performance of 202.7 per cent.

In the international market, yields on Kenya’s Eurobonds increased by 26.7 basis points on average. Yields on Angola also decreased while yields for Côte d’Ivoire Eurobonds increased.