The Kenya Shilling depreciated by 0.8% against the US dollar to close the week at Ksh.134.4 against the dollar.
The drop is from Ksh.133.3 recorded the previous week, owing to increased dollar demand from manufacturers and importers, especially oil and energy sectors against a slower supply of hard currency.
On April 11, the shilling traded against the dollar at 133.63 units when President William Ruto, in his conviction, said the country would expect the shilling to return to rates last traded in 2021 at around 120.
This, according to the President, is likely to be achieved starting May since Kenya has vacated the use of dollar bills for fuel importation but local currency.
Kenya has already received its maiden government-to-government petrol import (bought in local currency) of approximately 740,000 metric tons from Saudi Arabia.
On a year-to-date basis, the shilling has depreciated by 8.9% against the dollar, adding to the 9.0% depreciation recorded in 2022.
In a report by Cytonn, the shilling will still face pressure due to high global crude oil prices due to persistent supply chain constraints coupled with high demand.
On top of this, the persistent current account deficit currently estimated at 4.9 percent if Gross Domestic Product (GDP) in the 12 months to January 2023 from 5.6 percent recorded similar period last year would also exert pressure on the shilling.
On the hand, forex reserves which go in hand to support the import cover remained relatively unchanged at Ksh.862.1 billion as at 13 April 2023, similar to what was recorded the previous week.
The country’s months of import cover also remained unchanged at 3.6 months, similar to what was recorded the previous week, and below the statutory requirement of maintaining at least 4.0 months of import cover.
