Thousands of Kenyan traders and exporters could increasingly turn to the Chinese yuan instead of the U.S. dollar as trade between Kenya and China expands, a shift that economists say could provide fresh support for the Kenya Shilling.

🇰🇪 Breaking It Down

The development follows China's decision to remove tariffs on imports from 53 African countries beginning May 1, a move expected to accelerate trade flows between African economies and the world's second-largest economy.

Analysts say increased use of the yuan in trade settlements could reduce demand for the U.S. dollar among Kenyan importers and exporters, easing pressure on the foreign exchange market and supporting the local currency.

The Kenyan shilling has remained relatively stable in recent months and was trading at about Ksh129.55 against the U.S. dollar on Thursday morning, with the Central Bank of Kenya (CBK) projecting continued currency stability.

📌 What You Need to Know

According to Reuters , growing trade between China and African countries is expected to increase yuan-denominated transactions, particularly as more exporters seek direct settlement in Chinese currency instead of first converting funds through the dollar.

A local international bank in Kenya disclosed that it has begun issuing yuan-denominated letters of credit, enabling local firms to transact directly with Chinese suppliers while avoiding additional conversion costs associated with the dollar .

"We see it as complementary," the bank’s CEO told Reuters , noting that the yuan is not expected to replace the dollar but could become an increasingly important currency for trade between Africa and China.

The shift comes as Kenya deepens economic ties with China, which remains one of the country's largest trading partners and a major source of infrastructure financing.

Last year, Kenya converted three Chinese railway loans from dollars into yuan, a move that is estimated to save the country about Ksh27.8 billion annually in interest costs.

China's growing role in Kenya's export market is also expected to drive yuan adoption. Exports such as avocados, tea, coffee, macadamia nuts, and avocado oil are increasingly finding their way into Chinese markets following the removal of tariffs.

📰 Source: Kenyans.co.ke