- The currency was exchanged at an average of 115 against the dollar on April 4 which indicates that the country will have to face high inflation and pay more for its imports, electricity and debt servicing.
Kenya may have to pay heavily for its imports with the shilling sliding down to an all-time low. The currency was exchanged at an average of 115 against the dollar on April 4 which indicates that the country will have to face high inflation and pay more for its imports, electricity and debt servicing.
Central Bank of Kenya (CBK) data shows the Kenya shilling may continue to weaken pushing up living costs, hurting households already struggling with high fuel and food prices. The prices of cars, petroleum, machinery, medicine and pharmaceuticals products, vegetable oil, wheat, clothing, shoes etc are bound to climb up.The loss in value of shilling is attributed to the ongoing conflicts between Russia and Ukraine, rising oil prices, disruption of supply chains, and high demand for dollar from various sectors which has outstripped poor inflows. According to official Data, Kenya’s foreign currency reserves held by CBK dropped to $7.85 billion (equivalent to 4.66 months of imports) as on March 31, 2022.As on24 March 2022, its foreign currency reserves stood at $7.84 billion as at (equivalent to 4.80 months of imports). The Central Bank of Kenya (CBK) governor Patrick Njoroge at a recent Monetary Policy Committee meeting assured that the Bank will continue to provide adequate cover and buffer against any short-term shocks in the foreign exchange market.
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The geopolitical tensions have led to high Petroleum prices forcing the government to retain subsidies in a bid to ease the consumer burden. The depreciation of the currency will further burden the government as it will have to pay more for the petrol.
