Shilling Marginally Dips But Still Resilient Against The Dollar

Last week, the Kenyan shilling depreciated marginally against the US dollar to 108.6 shillings from 108.5 shillings mainly attributable to the dollar demands from energy and merchandise importers exceeding the supply from tourism, remittances, and exporters.

On a YTD basis, the shilling has depreciated by 7.2 percent against the dollar, in comparison to the 0.5 percent appreciation in 2019.

The local currency is expected to be supported by the high Forex reserves which are currently at USD 8.3 billion (equivalent to 5.0 – months of import cover).

The current Forex reserve is 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.

Improving current account position as it reduced by 39.9 percent during Q2’2020 to 82.2 billion shillings, from 136.9 billion shillings in Q2’2019, equivalent to 7.0 percent of GDP down from 10.9 percent of GDP recorded in Q2’2019.

During the week, the Energy and Petroleum Regulatory Authority (EPRA) released their monthly statement on the Maximum Retail Prices in Kenya for the period 15th October 2020 to 14^th November 2020.

READ: Kenyan Shilling Still Under Pressure From The US Dollar

Petrol prices have increased by 1.4 percent to 107.3 shillings per liter from 105.4 shillings per liter. Diesel prices have decreased marginally by 1.4 percent to 92.9 shillings per liter from 94.5 shillings per liter. Kerosene prices remained unchanged.

The changes in prices of fuel have been attributed to an increase in the average landed cost of imported super petrol by 1.1 percent to USD 331.7 per cubic meter in September 2020 from USD 327.7 per cubic meter in August 2020,

The average landed costs for diesel decreased by 5.4 percent to USD 312.0 per cubic meter from USD 329.9 in August 2020. Landed costs for kerosene remained unchanged at USD 282.1 per cubic meter recorded in August 2020.

There was a 7.4 percent decrease in Free on Board (FOB) price of Murban crude oil lifted in September 2020 to USD 42.4 per barrel from USD 45.7 per barrel in August 2020.

The Kenyan shilling depreciation by 0.6 percent against the dollar to close at 108.6 shillings in September 2020, from 107.9 shillings in August 2020.

READ: Diesel Prices Down By 2.18 Shillings In The New Review