· Driven by high dollar demands from importers and corporates, the Kenyan shilling dipped to an all-time low exchange rate at 111.7 units against the dollar.
· The local currency has been under severe pressure in the fourth quarter due to lower dollar receipts from key exports like tea and horticulture.
Driven by high dollar demands from importers and corporates, the Kenyan shilling dipped to an all-time low exchange rate at 111.7 units against the dollar. The local currency has been under severe pressure in the fourth quarter due to lower dollar receipts from key exports like tea and horticulture. At the same time, demand from corporates went up for hard currencies for machinery, oil and capital equipment imports. Forex reserves plunged from Sh41.2 billion (369 million USD) to Sh1.01 trillion (9.07 billion USD) in a 1 month period.
Shilling has been sliding down since the month started. After touching 106.5 in May. It has now lost value by five percent. With a weak shilling, the cost of imports has gone up. The forex reserves currently is around 5.5 months of import cover according to media reports. The Central Bank stated that the reserves are sufficient to meet the statutory requirement of at least 4 months of import cover. The current level has surpassed the previous record in December last year when it fell to Sh111.59 while the economy was struggling with the Covid-19 pandemic.
