- Commercial banks reported consistently high exchange rates, with figures peaking at Sh137 and hitting a low of Sh131 for the fifth consecutive time.
- The shilling was at its weakest in January 2024, exchanging at Sh160 against the dollar before it appreciated to trade at 133.99 per dollar.
Image: FILE
The US dollar made a remarkable comeback against the Kenyan shilling last week, according to data from the Central Bank of Kenya (CBK).
The shilling saw a significant depreciation, with the exchange rate reaching a staggering Sh131.44 against the dollar.
Forex Bureau shops exchange rates indicate that the Kenyan currency was oscillating between Sh133 to Sh135 against the dollar,
Commercial banks reported consistent high exchange rates, with the dollar selling at Sh137 and hitting a low of Sh131 for the fifth consecutive time.
The five consecutive days of losses against the dollar was being witnessed for the first time since mid-March.
Two weeks ago, the shilling continued to rally against the dollar trading at Sh127 marking a strong growth in the foreign exchange market.
CBK’s intervention in the foreign exchange market was seen to have played a role in supporting the shilling's appreciation against the dollar.
Favourable export conditions and steady remittance inflows also contributed to the shilling's strength.
This resurgence of the dollar is now likely to pose a challenge for Kenyan importers and travellers as it increases the cost of imported goods and foreign travel expenses.
The shilling was at its weakest in January 2024, exchanging at Sh160 against the dollar before it appreciated to trade at 133.99 per dollar.
CBK quoted the shilling at Sh139 on March 12.
It was the first time the CBK officially quoted the shilling at Sh139 since June 2023.
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.
With Kenya importing most of the manufacturing raw materials, it meant that a strong Shilling against the dollar would reduce manufacturing costs and subsequently lower the cost of goods.
External debts, Thugge said, currently stood at $38 billion.
The continued appreciation of the shilling against the dollar has seen the government save Sh40 billion per every shilling.
This has also impacted positively on the livelihoods of Kenyans as the petrol prices has significantly dropped as compared to electricity bills which are also expected to come down.