Last week, the Kenya Shilling depreciated by 0.2 percent against the US Dollar to close the week at 106.5 shillings, from 106.3 shillings, recorded the previous week.
Traders attributed the slight depreciation to high, end month, dollar demand from multinational companies and manufacturers importing goods.
The demand was, however, offset by the inflows from the horticulture exports as well as diaspora remittances. On a YTD basis, the shilling has depreciated by 5.1 percent against the dollar, in comparison to the 0.5 percent appreciation in 2019.
Pressure on the local currency will continue coming from the demand from merchandise and energy sector importers as they beef up their hard currency positions amid a slowdown in foreign dollar currency inflows.
There is a subdued diaspora remittance evidenced by the 9.0 percent decline to USD 208.2 mn in April 2020, from USD 228.8 seen the previous month.
The drop in diaspora remittances is mainly due to the decline in economic activities globally, coupled with increased prices of household items leading to lower disposable income.
Key to note, the Central Bank of Kenya (CBK) expects a 12.0% decline in remittances in 2020.
The shilling is however expected to be supported by high levels of forex reserves, currently at USD 9.2 bn (equivalent to 5.6-months of import cover), above the statutory requirement of maintaining at least 4.0-months of import cover, and the EAC region’s convergence criteria of 4.5-months of import cover.
Off the cuff
During the week, local developers, Ever Forgarden Company Limited and New Forhome Company, announced plans to develop 900 and 240 apartments, respectively, in Kilimani, Nairobi.
In the retail sector, Quickmart, a local retailer, opened its latest outlet in Kilimani, along Kilimani Road, marking its 32nd outlet nationwide, whereas in the hospitality sector, W Hospitality Group, an African tourism Investment advisor, released their Hotel Chain Development Pipelines in Africa 2020 Report highlighting that Kenya has approximately 3,588 rooms in the pipeline, to be hosted within 23 hotels under brands; Radisson Hotel Group, Accor Hotels, Swiss International, and, Marriott International.