How Value of Kenyan Shillings Has Depreciated in a Year

Kenya has been grappling with a decline in the value of its currency, not only against the dollar but also the euro and pound.

The costs of both local and imported products have escalated in recent times. Earlier in 2022, the American dollar was valued at Sh120.8, whereas current evaluations place it at Sh134, representing a considerable decline in the Kenyan shilling. On October 4, 2023, the shilling slid further to Sh148.4 against the dollar, a drop from last week's rate of Sh147.8. The shilling has continued to lose its value despite President William Ruto's vow to bring the exchange rate below Sh120. Trade Cabinet Secretary Moses Kuria had also echoed the government's effort to achieve an exchange rate of Sh85 between the US dollar and shilling.

The depreciation of the Kenyan shilling against the British pound is also raising concerns amongst Industry analysts. Central Bank of Kenya (CBK) states that the shilling has depreciated from Sh135.4 to Sh180.3 relative to the pound. Notably, the Kenyan shilling has faced a decline against currencies such as the Euro, Ugandan shilling, and Tanzanian shilling. For example, the Kenyan shilling, once valued at Sh118.3 against the Euro in 2022, has now breached the Sh155.5 mark. Consequently, there has been an upsurge in the prices of fuel and imported goods like 'Mitumba' (second-hand clothes).

In August, the Energy and Petroleum Regulatory Authority (EPRA) stated that the current weighted average cost of imported fuel stood at $774.67 per cubic metre. This represented a notable increase from June's value of $691.76 per cubic metre. Rising import costs due to the weaker shilling against the US dollar have also caused a hike in the price of second-hand clothing. Mitumba traders, particularly affected by this downturn, have disclosed that they now have to pay 2 times more for importing goods.

The price of importing a 40-foot container from China has remarkably increased, surging from $3,000 (equivalent to Sh445,200 using the current exchange rate) to $9,000 (approximately Sh1.34 million). Furthermore, inflation has caused the average household to find it necessary to allocate around Sh3500 every day for nutritious meals; this is three times higher than merely two years ago.