Sharp Daily
No Result
View All Result
Tuesday, June 3, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

How Will Continued Hawkishness Of The Fed Affect Kenya?

Anslem Murimi by Anslem Murimi
March 7, 2023
in News
Reading Time: 2 mins read
Federal Reserve hikes Interest rates

Federal Reserve hikes Interest rates [Photo/Courtesy]

Over the past 12-months, the Kenya shilling has depreciated 12.6% against the US Dollar to 128.3 as of 7th March 2023 from 114.0 on 7th March 2022.

This continued depreciation has mainly been driven by an ever-present current account with Kenya being a net importer and the import bill being in US Dollars, which had a bull run on the back of rate hikes.

The US Dollar Index appreciated by 5.0% to 104.2 as of 7th March 2023 from 99.3 on 7th March 2022 as the US Federal Reserve interest rate was hiked to 4.5%-4.75% in February 2023 from 0.25%-0.5% in March 2022 to manage inflation on the back of supply bottlenecks and elevated energy prices.

Interest rate hikes in the US affect the currency by increasing yields in the US, attracting investors who flock to US Fixed Income securities and divest from non-USD dominated ones, leading to the increased strength of the dollar.

RELATEDPOSTS

International Monetary Fund

How Kenya’s move away from IMF Loans could reshape its economic future

May 26, 2025

Digital lending in Kenya: Convenience meets controversy

May 16, 2025

Read: Equity Bank To Increase Interest Rates For Riskier Borrowers

Increased strength of the dollar increased the price of dollar imports hence demand for US Dollars by Kenyan importers significantly, further contributing to the depreciation of the Kenya shilling against the US Dollar.

In the Friday-released Monetary Policy Report, the United States Federal Reserve (the Fed) gave indications of a continued hawkish monetary policy stance. Year-over-year consumer inflation slowed down to 6.4% in January 2023 from its peak of 9.1% in June 2022, remaining well above the target of 2.0%.

This is attributable to demand levels that have remained resilient even in the face of rapid interest rate hikes attributable to a tight labour market with job gains averaging 380,000 per month since mid-2022 and a steady rise in consumer expenditure attributable to the spending of savings accumulated during the pandemic.

Jobs growth, consumer inflation, and retail sales data for February 2023 are expected mid-March, before the interest rate decision is taken on March 21 or 22. Should strong job growth, elevated inflation, and a jump in retail sales be recorded, there will be expectations of further rate hikes.

This could further lead to a strengthening of the US Dollar, causing an increase in Kenya’s US Dollar denominated import bill and debt payments, leading to a continued depreciation of the Kenya shilling against the US Dollar.

Email your news TIPS to editor@thesharpdaily.com

Previous Post

Kenya Set To Print UK Visas-What You Need To Know

Next Post

Looming Fuel Shortage In Kenya

Anslem Murimi

Anslem Murimi

Related Posts

News

Co-op Bank posts KES 6.9 billion profit in Q1’2025

May 16, 2025
Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025
News

The downside of Impact Investing

May 2, 2025
News

Leadership challenges at the University of Nairobi

April 24, 2025
News

Easter eggs and earnings: Growing your nest egg with CMMF

April 16, 2025
News

Geoffrey Ruku declares KES 377M net worth during CS vetting

April 15, 2025

LATEST STORIES

Economic reforms are costly

June 3, 2025

Cytonn Income Drawdown Fund (CIDDF)

June 3, 2025

Navigating the money market and fixed income funds landscape

June 3, 2025

Best investments for Kenyan seniors: Secure, predictable & low-risk

May 30, 2025

Why June is the Secret Sweet Spot for Travel

May 30, 2025

Strategies to elevate more women to corporate leadership

May 30, 2025

Tap on Kenya’s 2025 tech revolution

May 30, 2025

How CURBS supports employers and employees

May 30, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024