The Kenyan shilling has slumped below the KES 122 mark against the U.S dollar as it closes yet another key confidence marker.
The local currency changed hands for the green buck at a mean rate of KES 122.06 at the start of trading before slight gains on intra-day trading on Thursday.
The weakening trend in the Kenyan shilling is set to continue into 2023, with the U.S tipped for additional rate hikes, including in December.
Rate hikes in the Eurozone and the United Kingdom are, however, widely expected to have a lesser impact on the shilling as the pair of economies suffer from the fall-out of the Russia-Ukraine crisis.
Analysts at Sterling Capital expect the shilling’s losses to persist throughout 2023 and expect the mean exchange rate to stand between KES 126 and KES 128 across the year.
So far in 2022, the Kenyan shilling has shed 7.9 per cent of its value against the U.S dollar.
The stronger U.S dollar has also hit at Kenya’s official foreign currency reserves, which presently stand at an equivalent of four months of import cover, to equal the Central Bank of Kenya (CBK) prescribed lower limit.
Compared to other regional currencies in Sub-Saharan Africa, the local unit has sat ‘in the middle of the pack,’ according to the CBK.
The relative stability of the Kenyan shilling has been partly held up by increased remittances and improved exports in 2022.