Kenyan Shilling declines against US Dollar once more

Last week, the US dollar staged an impressive resurgence against the Kenyan shilling, as reported by the Central Bank of Kenya (CBK). The shilling experienced notable devaluation, with the exchange rate soaring to a striking KES 131.44 against the dollar.

In January 2024, the shilling reached its lowest point, trading at KES 160 against the dollar, before rebounding to reach 133.99 per dollar.Data from Forex Bureau shops revealed that the Kenyan currency fluctuated between KES 133 and KES 135 against the dollar.

Commercial banks consistently reported elevated exchange rates, with the dollar being sold at KES 137 and reaching a low of KES 131 for the fifth consecutive time. The Central Bank of Kenya’s (CBK) intervention in the foreign exchange market was perceived as a factor in bolstering the shilling’s appreciation against the dollar.

Additionally, favourable export conditions and consistent remittance inflows also played a part in strengthening the shilling. The depreciation of the dollar had become a source of concern with CBK Governor Kamau Thugge indicating that they would intervene should it continue to fall beyond its expected limit.

“We’ll allow the inflows and demand and supply of foreign exchange to determine that level but we have to have the right balance,” Thugge said.

“We must ensure that the exchange rate is broadly reflecting the market economic fundamentals and that the rate is that which encourages exports, that which is not punitive to imports,” he added.

The ongoing strengthening of the shilling against the dollar has resulted in the government saving KES 40 billion for every unit increase in the shilling’s value.

This development has also brought about positive effects on the lives of Kenyans, leading to considerable reductions in petrol prices. Conversely, electricity bills are anticipated to follow suit and decrease as well.