Kenya’s shilling has remained stable against major international and regional currencies, helping maintain commodity prices despite disruption in global freight that has seen shipping costs increase.
The shilling has gained 20 per cent against the US dollar year-to-date, exchanging at Sh128 on Tuesday, compared to a record low of Sh160.23 recorded in January.
Kenya being a net importer, a gaining shilling means importers spend less to secure dollars for imports, translating to lower costs and final commodity prices.
The shilling was on a free—fall towards the end of last year and early this year, a period that the country also experienced a dollar shortage.
Central Bank of Kenya has been putting in place several policy measures to try and stabilise the local currency as well as tame inflation, which slightly went up to 5.1 per cent in May, from April's five per cent.
The apex bank also increased its base-lending rate to 12.50 per cent in December, before a further increase to 13 per cent in February which has been maintained to-date.
Usable foreign exchange reserves remain adequate, according to CBK, at $ 7.01 billion or Sh900 billion, which is 3.7 months of import cover, as of June 13.
“This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover,” CBK said.
Lower fuel prices experienced in recent months have also helped ease pressure on households, mainly on the cost of living.
The May 2024 Agriculture Sector Survey shows that majority of respondents expect inflation to either remain unchanged or decrease in the next three months, on account of expected increase in food supply following favorable weather conditions, stability of the exchange rate, and easing fuel prices.
