Weakening Kenya Shilling hits historic low of 120 against the US Dollar
The Kenya Shilling has been sustaining a dispirited trend against the greenback for slightly over two years to eventually trade at an all-time low of Kes120 at the start of trading on Monday.
At the close of business on Monday, the local currency depreciated against the dollar to trade at Kes.119.93 from Kes119.91 last week. On a year-to-date basis, the shilling has depreciated 6 percent to the dollar, compared to 3.64 percent in 2021.
Kenyans now have a fuzzy recollection of times when a hundred shillings note matched the value of a greenback in January 2020, before the pandemic sparked economic fallout in the country.
Covid-19 turned out to be such a disaster for the global economy as containment measures disrupted trade and travel across the world. Frontier economies such Kenya bore the brunt of it as exemplified in the unrelenting devaluation of the shilling.
This grim outcome was hardly surprising for analysts as the shilling took on the downward spiral in March 2020 when the country reported its first case of Covid-19.
Read also: Huge import bill is weakening the Kenya Shilling
The tumble down the abyss didn’t let up ever since and the outlook for days ahead couldn’t be dimmer as the weakened shilling looks set to exacerbate inflation and cost of imported goods.
Maudhui House on August 18 reported on how a huge import bill is weakening the Kenya Shilling in a piece that delineated how a weak local currency exposes the economy to imported inflation through shipping in costly crude oil and other essential commodities such as metals and fertilisers.
The devaluing shilling has had dire ramifications for importers who have had to spend more to bring in crude oil and industry raw materials, further increasing the cost of inputs which will ultimately be passed on to the final consumer.
Domestic inflation hit 8.3 percent in July on account of rising prices of essential items, constraining household budgets and prompting workers to cut down on non-essential spending.
With the presidential poll still unresolved at the Supreme Court and the Russian invasion of Ukraine still ongoing, the Kenya Shilling market analysts expect further weakening of the local unit against the dollar in the short-term.
