The Kenyan Shilling took the worst hit to trade at its weakest against the US dollar Friday, perhaps the worst loss in history.
At Friday’s opening, the Shilling traded 126.5 units against the dollar, two days after breaking the 126 mark against the dollar. It now falls short by 0.5 units to hit the 127 mark.
It has dropped by 0.4 percent in four days to Friday when it kicked off the week at 125.6 units – according to the Central Bank of Kenya (CBK) data.
Friday’s opening of 126.5 units indicates persistent inflationary pressure compared to 123.2 units at the start of the year.
Commercial banks are selling dollars between Ksh.135.80 and Ksh.137.50.
This is the lowest the Kenyan Shilling has gone against the dollar.
The continued depreciation has been mainly driven by an ever-present current account with Kenya being a net importer and the import bill being in US Dollars.
Kenya imports goods such as petroleum products, wheat, second-hand clothes, motor vehicles, vegetable oils and industrial machinery, with a weaker shilling pointing towards increased dollar demand from these goods.
Besides, the aggressive public debt accumulation, especially external debt at a 10-year Compound Annual Growth Rate (CAGR) of 19.0% to Ksh.4.8 trillion in December 2022, from Ksh.800 billion in the same period in 2012 has continued to exert pressure on Shilling, due to the increased servicing costs, considering that 69.3% of the external debt stock is in US Dollars.