The Kenya Shilling lost value against the US dollar when forex markets closed yesterday to exchange at 109.2100, breaking the 109 barrier.
Dealers in the market were quoting the local unit at much lower rates, as a surge in the import demand outstripped foreign exchange earnings from exports of tea, flowers and horticulture
According to the Bloomberg Markets US$ to Kenya Shilling Exchange Rate, the local unit opened trading at 108.6000 from the previous 108.6200. It was trading within the range of 108.6500 and 109.2100 when markets closed.
Data from the latest Central Bank of Kenya (CBK) Weekly bulletin shows that the Kenya Shilling exchanged at KSh 108.61 per US dollar on October 15th October, 2020.
This exchange rate level is compared to Ksh 108.53 per US dollar on October 8th, 2020. Over the last one year, the shilling has traded in the range of 100.2900 – 109.2100 against the greenback.
A weakening Kenya Shilling is happening when Kenya’s Public Debt is also on the rise, putting pressure on the Country’s debt repayment bill.
Figures from National Treasury and the Central Bank of Kenya (CBK) show that Kenya’s Public Debt has risen from KSh 6.2 Trillion in February 2020, to KSh 6.7 Trillion in June 2020 and finally reaching KSh 7.1 trillion in August 2020.
CBK figures show that in August 2020, domestic debt was equal to KSh 3.4 Trillion while external debt was KSh 3.7 Trillion or US$ 33.88 Billion.
A weakening Kenya Shilling poses a disadvantage to importers who have to dig deeper into their pockets to import products such as crude oil, medicine, or machinery.
But the situation is a boon for exporters, who earn more in Shilling terms from their export earnings.
The Kenyan Shilling has been under slight pressure as end month approaches as increased demand from energy and merchandise importers exceeded supply from remittances, horticulture exports and tourism, traders said.
Top on the list of losers as a result of a weakening Kenya Shilling is electricity consumers, who will pay higher in October. Electricity bills are set to go up as the power company makes adjustments to compensate for the sliding shilling.
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