Examining the Influence of Exchange Rate on Bilateral Trade Balance between Kenya and the European Union

The research investigated how exchange rate fluctuations influence the bilateral trade balance between Kenya and the European Union (EU). It relied on secondary data sourced from institutions such as the World Bank, the Central Bank of Kenya, and surveys conducted by the Kenya National Bureau of Statistics. Descriptive analysis was applied to reliable import and export data from selected EU countries, and the findings were presented narratively. The study focused on the period between 2001 and 2016. The results revealed that several key factors, including trade openness, inflation, and foreign aid shape Kenya’s economic growth. Specifically, trade openness, net foreign assets, and oil prices emerged as significant determinants of growth. While greater trade openness was found to promote economic expansion, rising oil prices had the opposite effect, constraining Kenya’s economic performance.