Inflation & Currency Stability
In February, inflation rose slightly to 3.5% from 3.3% in January, mainly due to an increase in the cost of vegetables, especially tomatoes and Sukuma wiki. However, there’s no major cause for concern, as the economy remains stable.

One key impact of inflation is that, it lowers real returns on investments. If investments don’t grow at a rate higher than inflation, their real returns decline. This can affect long-term wealth accumulation and purchasing power.

On the currency front, The Kenyan shilling has been quite resilient, holding at around 129 against the dollar for the past eight months with marginal upticks and declines over the months. Our foreign exchange reserves are also in a good position, standing at $9.06 bn dollars as of February 2025.

Eurobond Issuance
The Nation Treasury and Planning issued a new Eurobond worth $1.5 bn, set to mature in 2036. This is an 10-year bond with a yield of 9.95% and a coupon rate of 9.5%. CBK plans to use $900 million from the proceeds to settle part of the Eurobond maturing in 2027.

This strategy is similar to last year when the Treasury also issued a $1.5 billion Eurobond to refinance the one maturing in June 2024. The good news with this issuance is that this year’s bond was issued at a lower yield—9.95% compared to 10.375% last year meaning Kenya is now borrowing at a cheaper rate and that investor confidence has improved.

In summary, while inflation has edged up, the economy remains stable. The shilling is steady, forex reserves are healthy, and Kenya is managing its debt in a way that improves investor sentiment. However, it’s important for investors to consider inflation’s impact on real returns when making financial decisions.