Kenyan shilling now 0.4 units shy to hit 112 level never witnessed before
The Kenyan Shilling slumped to a historic low against the US Dollar Friday, signaling tough times for Kenyans due to high cost of fuel and power.
According to data from Metropol Harvest, the local unit exchanged at Ksh.111.61 with the dollar Friday, its lowest valuation ever.
The shilling last dropped to a ten-month all-time low to a Dollar on October 26 when it crossed the Ksh.111 mark.
It was once spotted at this weakest mark last year on December 22 when it traded at Ksh.111.68 on October 19, the Shilling was quoted at 110.9.
While the weakening of the shilling has not been traced to one specific factor, analysts have pointed to a number of elements dwindling the local unit’s value.
This includes rising uncertainties at the global market place, a widening current account deficit at the restart of international trade and a skewed demand for dollars especially from oil importers.
While the Central Bank of Kenya (CBK) is yet to comment on the recent dwindling of the local currency, Governor Dr. Patrick Njoroge has stated previously that the reserve bank would only intervene in the case of volatility.
Nevertheless, the CBK has remained active in open market operations (OMOs) to smoothen out shocks on the domestic forex exchange and guard against unprecedented gains or declines in the valuation of the shilling.
In most cases, however, weakening of the shilling can mainly be attributed to increased dollar demand from the energy sector importers.
A weaker shilling means importers spend more to bring in goods such as petroleum products and raw materials for factories, a development which may result in price increases for consumers in a net import economy.