For the past week, the Kenya Shilling depreciated by 0.4% against the US dollar to close the week at Ksh.143.6 from Ksh.142.9 recorded the previous week.
On a year-to-date basis, the shilling has depreciated by 16.3% against the dollar, adding to the 9.0% depreciation recorded in 2022.
An ever-present current account deficit, which came at 2.3% of GDP in Q1’2023 from 4.2% recorded in a similar period last year.
The need for government debt servicing continues to put pressure on forex reserves given that 66.8% of Kenya’s external debt is US Dollar denominated as of April 2023.
Experts say the shilling will be by a number of factors including diaspora remittances which currently stand at a cumulative USD 2,033.8 million in 2023 as of June 2023, albeit 0.5% lower than the USD 2,044.6 million recorded over the same period in 2022.
It will also be supported by the tourism inflow receipts which came in at Ksh.268.1 billion in 2022, a significant 82.9% increase from Ksh.146.5 billion inflow receipts recorded in 2021.
The shilling will also be anchored by adequate forex reserves currently at USD 7.4 billion (equivalent to 4.0 months of import cover), which is within the statutory requirement of maintaining at least 4.0 months of import cover.
It opened the week Monday, August 14, 2023, to trade at 143.7 units against the dollar