Economy
Kenyan Shilling Drops to New Record Low
The Kenyan Shilling has weakened against the dollar to a new record low of KSh115 as of Friday, 26th March 2022.
Commercial banks quoted the shilling at KSh114.70/90 compared to Thursday’s closing rate of KSh114.60/80.
The drop is attributed to high demand for the dollar by importers of petroleum products due to fluctuating global prices, as well as increased demand for other raw materials.
The depreciation is expected to cause reduced income in the sectors of exports, tourism and diaspora remittance.
This is because importers spend more acquiring products which in turn raises the cost of production, thereby affecting consumers through higher prices.
However, exporters of tea, coffee and horticultural products benefit from the weakening Kenyan shilling as they are mainly paid in dollars.
The shilling has depreciated by 1.47% since the beginning of the year, and analysts expect worse due to increase of expenditure for materials for the August General Elections.
Reports in Early March from ForecasEconomics predicted that the shilling will drop up to Ksh116.70 by end-year.
The Ukraine-Russian war has been cited as a factor that increased demand for haven prices thereby strengthening the US dollar.
Global oil prices remain uncertain due to disruption of supplies in Russia caused by sanctions over the conflict.
