Money is weird. One day you're looking at a screen and everything seems stable, and the next, your Kenyan Shilling just doesn't buy what it used to in Paris or Berlin. If you've been tracking the EUR to KES exchange rate lately, you know exactly what I'm talking about. As of January 17, 2026, we’re seeing the Euro hover around the 149.89 mark against the Shilling.
It feels like a lifetime ago—specifically early 2025—when the rate was sitting much lower at around 131. That’s a massive shift. People often think exchange rates are just random numbers on a ticker, but honestly, it’s more like a giant, invisible tug-of-war between two very different economies. You have the Eurozone, which is currently trying to keep its head above water with steady interest rates, and then you have Kenya, where the Central Bank has been on a bit of a rate-cutting spree to get people spending again.
Why the Shilling is struggling against the Euro right now
Let’s be real for a second. The Shilling hasn't had the easiest run over the last year. While it’s been surprisingly steady against the US Dollar—kinda clinging to that 129 range—it has taken a beating from the Euro. We’re talking about a 12.8% depreciation over 2025. That hurts.
Why is this happening?
Well, it’s a classic case of diverging paths. The Central Bank of Kenya (CBK), led by Dr. Kamau Thugge, has been lowering the Central Bank Rate (CBR) like it’s going out of style. They just cut it again in December 2025 to 9.00%. That was the ninth cut in a row! The goal is simple: make it cheaper for Kenyans to borrow money so the economy can grow. And it's working, sort of. GDP growth is projected to hit 5.5% this year.
But there's a trade-off.
When a country cuts interest rates, its currency often loses its "sparkle" for international investors. Why keep your money in Shillings when the return is dropping? Meanwhile, over in Europe, the European Central Bank (ECB) is playing a much more cautious game. Christine Lagarde and her team have kept their key deposit rate at 2.0% for months. They aren't in a hurry to cut more because they’re still worried about service-sector inflation. This makes the Euro relatively "expensive" to hold, which naturally pushes up the EUR to KES exchange rate.
The diaspora factor and the 2026 tax surprise
If you’re sending money home from Europe, you’ve probably noticed your Euros are going a lot further in Nairobi lately. Diaspora remittances are huge for Kenya—we’re talking over $5 billion a year. But there’s a new wrinkle in the story for 2026.
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The US just slapped a 1% excise tax on remittances starting January 1st. You might think, "Well, I'm in Europe, who cares?" But the global money market is interconnected. When it gets more expensive or difficult to move money from one major hub, it shifts the flow of liquidity everywhere. Analysts at Standard Investment Bank have already noted that while cumulative inflows were up last year, monthly dips are starting to show.
What’s actually driving the volatility?
It isn't just interest rates. Kenya’s trade deficit is widening. We are importing way more industrial machinery and vehicles than we are exporting tea and coffee. In late 2025, the merchandise trade deficit jumped to over KES 355 billion. When you buy stuff from abroad, you need foreign currency to pay for it. That creates a constant demand for Euros and Dollars, which keeps the Shilling under pressure.
Also, don't ignore the "Trump factor." With the US moving toward higher tariffs and trade uncertainty in 2026, the Eurozone is actually holding up better than people expected. The ECB even upgraded its growth forecast for the Euro area to 1.2% for 2026. A "stronger for longer" Euro means the Shilling has to work twice as hard just to stay in the same place.
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Is the EUR to KES exchange rate going to hit 160?
That’s the big question, isn't it? Honestly, it’s a toss-up.
Some analysts, like those at Cytonn, think the Shilling will stay "relatively stable" because inflation in Kenya is actually behaving itself—hovering around 4.5%, which is right in the middle of the CBK's target. If inflation stays low, the CBK doesn't have to panic.
On the flip side, we have the 2027 elections looming. Markets are already starting to get a bit twitchy. Investors hate uncertainty. If they start pulling "hot money" out of the Nairobi Securities Exchange (NSE) to wait out the political season, the Shilling could slide further. We saw some of this at the start of January 2026, with Eurobond yields creeping up as investors priced in that extra risk.
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Practical things you should be doing
If you’re a business owner or someone who regularly deals with the EUR to KES exchange rate, sitting back and hoping for the best is a bad strategy.
- Watch the CBK meetings: The next big interest rate decision is in February 2026. If they hold at 9%, the Shilling might find a floor. If they cut again, expect the Euro to climb.
- Hedge if you can: If you have large payments due in Euros in six months, talk to your bank about forward contracts. Locking in a rate near 150 might look like a genius move if it hits 158 by July.
- Time your remittances: Historically, the Shilling tends to see some volatility around the end of the month when companies are buying forex to pay suppliers. Mid-month is often a "calmer" time to convert.
- Diversify your savings: If you're in Kenya, keeping some portion of your liquid assets in a Euro-denominated account (or a money market fund with offshore exposure) acts as a natural insurance policy against a weakening Shilling.
The reality of the EUR to KES exchange rate in 2026 is that we are in a "new normal." The days of 120 are gone. We’re looking at a world where the Euro is a premium currency, and the Shilling is a high-growth, high-volatility bet. Whether you're an importer in Gikomba or a tech worker in Berlin, the smart move is to plan for more fluctuations, not fewer.
Keep a close eye on the European inflation data coming out in the next few weeks. If Eurozone inflation dips below 1.9%, the ECB might finally pull the trigger on a rate cut, which would be the first real "break" the Shilling has had in over a year. Until then, stay cautious.