The Kenyan Shilling (KES) on Tuesday slid to an all-time low of 107.9400 against the US Dollar driven by demand for the greenback as importers, including manufacturers and energy marketers place their orders as businesses seek to return to normal following the lifting of a coronavirus-induced lockdown.
On Tuesday’s session, the shilling traded in the range of 107.5000 – 107.9400 according to data from Bloomberg. The shilling has been very volatile since the start of the year having declined by more than six per cent on a YTD basis.
According to Reuters, Kenya’s Central Bank (CBK) on Tuesday was spotted in the market selling dollars to support the shilling against increased dollar demand.
The CBK is expected to hold its next Monetary Policy Committee meeting on July 29th, 2020.
ALSO READ; Kenya Shilling to Come Under Intense Pressure
Phased Re-Opening
Despite the rising number of COVID 19 Infections, Kenya’s President Uhuru Kenyatta earlier this month announced a phased re-opening of the economy and allowed movement in and out of the main cities Nairobi and Mombasa. The partial lockdown had been in effect since April 7th.
Kenya resumed domestic flights on July 15th while international flights are expected to resume from 1st August following the lifting of internal travel restrictions.
Diaspora Remittances and Horticulture
Diaspora remittances are now Kenya’s leading source of forex, ahead of tourism and agricultural exports such as tea, coffee, and horticulture. The Kenya Shilling has been supported by inflows from horticulture exports and diaspora remittances supplying end month dollar demand from manufacturers and some multinational companies.
According to data from the Central Bank, diaspora remittances inflows recovered in May 2020 to hit USD 258.2 million from USD 208.2 million recorded in April. This was a 24 per cent growth month on month. The highest increases in inflows came from the US and South Africa. Other significant increases were realized from Saudi Arabia, the United Kingdom, Qatar, Australia and Switzerland.