East Africa’s most promising economy – Kenya has been growing at a positive 4-5% during the last decade. With international trade increasing bank of Africa’s Kenya Head has urged small and medium enterprises to explore foreign exchange hedging strategies to mitigate currency risk.
The recommendation comes after the Kenyan shilling had a topsy-turvy ride last year and importers of oil, fertiliser and chemicals were forced to dig deeper to purchase raw products. Corporates can engage in numerous derivatives products to manage their risk. Options and Forwards are widely used to book or determine rates for future pricing. Options are useful as they give corporates up and down side pricing and risk management.
The shilling against the greenback is currently trading at: KES/USD = 83.12689
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Kenya has benefited from the local capital markets embracing electronic trading. Kenya is a great market for FX derivative providers offering solutions to corporate and institutional clients.
The retail market is gaining momentum as internet usage and disposable income are increasing. Africa is one of the growth stories of the next decade.
Forexmagnates team have written a detailed report on the state of FX in Africa; available in the Q2 quarterly repo 2012.