By Amina Faki,
The Kenya shilling depreciated against the US Dollar by 1.2 percent in H1’2017 to close at 103.7 shillings driven by increased food and oil imports.
The shilling also weakened against two other major currencies by 7.3 percent and 10.6 percent year-to-date for the Sterling pound and the Euro respectively.
Generally, regional currencies registered mixed performance during H1’2017 with most gaining against the dollar YTD, wrote Cytonn Investment in a report.
East African currencies depreciated against the dollar losing an average of 1.1 percent YTD and 3.2 percent YTD in the last twelve months.
According to Cytonn investments, the weakening of the East African currencies against the US Dollar was steered by two major factors:
- Increased food imports during the drought period
- Increased oil imports as importers took advantage of the lower global oil prices that were expected to rise
The table below shows the performance of selected Sub-Saharan Africa currency against the US dollar courtesy of Cytonn Investment
The key to note is that most currencies that appreciated against the dollar also experienced gains in their stock market indices as their near-term outlook remained positive and dollar flows from investors increased.
Last week, the shilling posted mixed performance with the local unit gaining 0.05 percent against the US dollar supported by improved dollar inflows.
The shilling was supported by the Central Bank as foreign exchange reserves dwindled by 141 million US dollars in the week.
On the other hand, the Euro and the Pound gained 1.93 percent and 1.88 percent respectively supported by the open market operations from the respective head of European Central Bank and Bank of England.