The Kenya Shilling remained relatively stable against the dollar during the week to close at 103.1 shillings, from 103.2 shillings recorded the previous week according to a report released by Cytonn Investments.
The Shilling is, however, likely to be under pressure in coming weeks on account of:
- increased dollar demand from oil importers as global oil prices drop below USD 50.0 per barrel, as it is cheaper for oil importers to increase purchases now before prices begin on an upward trend.
- sugar imports as production declined due to low rainfall experienced in October and November 2016, thus requiring the government to import an additional 400,000 tons in the next 3 weeks to meet the demand for sugar in the country.
On a year to date basis, the shilling has depreciated against the dollar by 0.6 percent. With the current forex reserve level, currently, at USD 8.3 billion (equivalent to 5.5 months of import cover), Cytonn believes the CBK will be able to support the shilling in the short term.
The skyrocketing cost of living in Kenya has become a concern for many with the price of basic commodities such as maize flour and maize moving out through the window from most homesteads in the country. a 2-kilogram packet of maize flour is retailing between 140 and 150 shillings despite the government assurances through the Treasury and the Ministry of Agriculture that the prices were going to be brought down to an average of 115 shillings.