Kenyan Shilling Hits New Record Low Against the US Dollar

The Kenyan shilling has hit a record low against the US dollar, making imports such as fuel, electricity, and foreign currency loans more expensive to service. 

Manufacturers' demand for the dollar has caused the shilling to fall to an average of 142.98 against the dollar. This is the second time in less than a week that the shilling has decreased, piling pressure on importers. Consequently, Kenyans may experience an escalation in the cost of basic commodities which is already overwhelmed as taxation stands high.

It's likely that customers will face higher electricity bills as they will shoulder the burden of increased production costs. This can be attributed to forex fees included in the power bills. Moreover, the country may end up paying more for the fuel that they imported on credit, leading to a rise in petrol prices for consumers. Nevertheless, exporting flower, tea, and coffee produce may prove profitable as their gains may see a bump up.

Analysts have cautioned that the Kenyan currency may continue to weaken but there is hope for a recovery towards the end of the year. According to EFG Hermes Research, the Kenyan Shilling may weaken against the dollar and reach Sh150 by December 2023. EFG Hermes in its reports has explained that the weakening of the currency is largely due to Kenyans stockpiling the US dollar.

The report states that a lack of available dollars in the market has caused the shilling to continue on its downward trajectory. EFG Hermes Research's Director of Frontier Banks Ronak Rasiklal Gadhia says that while the Central Bank of Kenya has attempted to strengthen the shilling by increasing rates, this has not produced the desired outcome. Meanwhile, Professor Fred Ogolla warns that quick action is necessary to halt the shilling's decline.