The Kenya shilling exchanged at 129.75 to the US dollar on Monday, October 12, according to the Central Bank of Kenya’s indicative rate, little changed from a week earlier. The 91-day Treasury bill rate stood at 8.762 per cent, almost level with the Central Bank Rate.
CBK’s weekly bulletin showed the shilling at 129.94 on October 8 against 129.71 on October 1. Against other currencies it traded at 171.67 to the pound and 145.32 to the euro on Monday.
Policy on hold
The steadiness follows the Monetary Policy Committee’s decision on October 7 to keep the Central Bank Rate at 8.75 per cent. The committee said that stance “remains appropriate to ensure that inflation expectations remain anchored within the target range, and the exchange rate remains stable.”
Inflation is the reason for caution. Headline inflation rose to 6.8 per cent in September, inside the 2.5 to 7.5 per cent target band but near the top. Core inflation climbed to 4.0 per cent, driven by milk, wheat products and edible oils. Non-core inflation eased to 14.0 per cent as vegetable prices and energy inflation fell.
The MPC pointed to elevated global energy prices linked to the conflict in the Middle East. It credited subsidies and the temporary cut in VAT on fuel with holding down domestic prices, and said it would watch for second-round effects of oil prices. It meets again in December.
Money market calm
The interbank market shows little stress. The Kenya Shilling Overnight Interbank Average (KESONIA) was 8.7518 per cent on October 9, right on the policy rate, and banks held about Sh23.3 billion in excess reserves above the cash reserve requirement during the week to October 8.
Demand for government paper is strong. The latest Treasury bill auction attracted Sh75.4 billion in bids for Sh28 billion on offer, Kenyan Wallstreet reported. Heavy oversubscription tends to keep yields from rising and gives the Treasury room to accept only the bids it wants.
What borrowers and savers see
Lower policy rates over the past year have started to feed through to loans. CBK data show the average commercial bank lending rate at 14.34 per cent in August, while deposits paid 6.91 per cent and savings accounts 3.54 per cent. The MPC said private sector credit growth remained strong.
For importers, a shilling holding near 130 makes it easier to price stock and settle letters of credit. The main risk is oil. With Brent above $100 a barrel, a sustained rise in the fuel import bill would increase dollar demand, and the CBK has signalled it is ready to act if inflation moves towards the top of its band.
Savers in money market funds and T-bills can expect returns close to current levels until the December MPC meeting.
Sources: Central Bank of Kenya, MPC press release (Oct 7, 2026) | CBK Weekly Bulletin (Oct 9, 2026) | CBK key rates | Kenyan Wallstreet
