The Kenyan shilling has continued receiving the heat from the US Dollar, dropping to its lowest in history as of the close of business on Wednesday.
The local currency ended the day on Wednesday at 108.40 shillings to the dollar with traders attributing the fall to the scramble for hard currencies from importers.
Importers have increased demand for the dollar following the easing of Covid-19 restriction by President Uhuru Kenyatta on July 6, 2020. The President lifted the cessation of movement in and out of the counties of Nairobi, Mombasa, and Mandera.
The President also allowed international flights in and out of the country. Kenya Airways has already resumed the flights.
Kenya imports vital commodities such as fuel, medicine, clothes, cars, and industrial raw materials, a depreciating shilling make the imports costly with the effect trickling down to all facets of the economy, and finally, the consumer carries the extra burden.
The shilling has shed 5.83 percent since March 13 when Kenya reported its first Covid-19 case and has breached forecasts of the local currency hitting a low of Sh107 against the dollar due to the pandemic according to stats on the Business Daily.
On Tuesday, the local currency closed the day at 107.9 to the US Dollar, a drop that was attributed to the end of month dollar demand. Companies have increased demand for dollars as foreign reserves decline.
According to data compiled by Bloomberg, a drop closer at that level would be lowest the Kenyan shilling has ever dropped since December 1988. Analysts say the shilling is likely to have some leeway at the beginning of August.
Last week, the Kenya Shilling depreciated by 0.5 percent against the US Dollar to close the week at 107.5 shillings from 106.9 shillings, recorded the previous week.
The slight depreciation was attributable to increased dollar demands from importers as global economies continued easing movement restrictions.
On a YTD basis, the shilling has depreciated by 6.0 percent against the dollar, in comparison to the 0.5 percent appreciation in 2019.