Shilling's rally set for dividends season dollar demand test
Business
By
Brian Ngugi
| Apr 23, 2025
The shilling, fresh from a sustained rally against the US dollar, is anticipated to face renewed downward pressure as the annual dividend payout season for listed firms approaches, traders said yesterday.
Demand for the greenback from companies with foreign shareholders seeking to repatriate dividends is expected to intensify in the coming weeks, adding to existing dollar demand from energy and manufacturing importers.
A slew of prominent Kenyan companies, as indicated by announcements from the Central Depository and Settlement Corporation (CDSC), have declared their dividend payouts and set crucial book closure dates for 2025.
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This mid-year surge in dollar demand by these firms traditionally exerts pressure on the local currency.
Leading the dividend yield is StanChart Bank Kenya, announcing a substantial Sh37.00 per share, with a book closure date of April 30 and payment scheduled for May 28.
BAT Kenya also declared a significant dividend of Sh25.00 per share, setting its book closure for May 23, 2025, and payment on June 25.
Other notable dividend payouts include Equity Group Holdings at Sh 4.25 per share (book closure May 23; payment June 30) and East African Breweries Ltd (EABL) at Sh3.50 per share (book closure February 28; payment April 30).
Concerns over the shilling's vulnerability during dividend repatriation periods previously led the Central Bank of Kenya (CBK) to reportedly influence Safaricom's decision to split its dividend payments, aiming to mitigate concentrated dollar demand.
Despite this looming pressure, the shilling has shown significant strengthening against the dollar in recent weeks.
This strengthening had raised hopes of easing inflation and lowering import costs, with CBK data on Monday showing the shilling averaging 129.8010 against the dollar and its weekly bulletin noting stability at 129.79 per dollar as of April 17.
However, traders anticipate that the impending dividend payouts will test this sustained stability as demand for dollars for repatriation purposes increases.
The extent of the pressure and the CBK's potential interventions will be closely watched by the market.