Skip to content
Headlines

Shilling Shed Off 0.8% In July, Closes The Month At The Lowest In History

BY Soko Directory Team · August 1, 2022 09:08 am

KEY POINTS

Kenyan shilling depreciated by 0.2 percent against the US dollar to close the week at 118.8 shillings, from 118.6 shillings recorded the previous week, partly attributable to increased dollar demand from the oil and energy sectors against a slower supply of hard currency.

KEY TAKEAWAYS

The aggressively growing government debt, with Kenya’s public debt, has increased at a 10-year CAGR of 18.2 percent to 8.6 trillion shillings in May 2022, from 1.6 trillion shillings in May 2012 thus putting pressure on forex reserves to service some of the public debt.

During the month of July, the Kenya Shilling depreciated by 0.8 percent against the US Dollar, to close the month at 118.8 shillings, from 117.8 shillings recorded at the end of June 2022.

The depreciation during the month was driven by the increased dollar demand from oil and merchandise importers on the back of increased global oil prices against slower recovery in exports against slower supply of hard currency.

During the week, the Kenyan shilling depreciated by 0.2 percent against the US dollar to close the week at 118.8 shillings, from 118.6 shillings recorded the previous week, partly attributable to increased dollar demand from the oil and energy sectors against a slower supply of hard currency.

On a year-to-date basis, the shilling has depreciated by 5.0 percent against the dollar, higher than the 3.6 percent depreciation recorded in 2021.

Pressure on the shilling will come from:

High global crude oil prices are on the back of persistent supply chain bottlenecks are further exacerbated by the Russian-Ukrainian geopolitical pressures at a time when demand is picking up with the easing of COVID-19 restrictions and as economies continue to recover.

Increased demand from merchandise traders as they beef up their hard currency positions in anticipation of increased demand as economies gradually recover.

An ever-present current account deficit due to an imbalance between imports and exports, with Kenya’s current account deficit, estimated to come in at 5.3 percent of GDP in the 12 months to June 2022 compared to the 5.2 percent for a similar period in 2021.

The aggressively growing government debt, with Kenya’s public debt, has increased at a 10-year CAGR of 18.2 percent to 8.6 trillion shillings in May 2022, from 1.6 trillion shillings in May 2012 thus putting pressure on forex reserves to service some of the public debt.

Support for the shilling will come from:

High Forex reserves are currently at USD 7.7 bn (equivalent to 4.5-months of import cover), which 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 diaspora remittances are evidenced by a 6.6% y/y increase to USD 326.1 mn as of June 2022, from USD 305.9 mn recorded over the same period in 2021, which has continued to cushion the shilling against a faster depreciation.

Related Content: Shillings Sheds Off 0.03% On Friday

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

Trending Stories
Government and Policy Ministry Of Education Announces New School Calendar For 2025 Getrude Mathayo
Market News Kenya Has The Highest Fuel Prices On The African Continent Thanks To An Archaic & Repugnant Tax Regulation Environment Steve Biko Wafula
Entrepreneur's Corner The Brutal Truth: Why Genuine Business Isn’t For The Weak Steve Biko Wafula
Technology Meta-Sponsored Vambo AI & Futurize Hackathon Drives Innovation At Kenya Innovation Week 2024 Soko Directory Team
Lifestyle I&M Bank Launches Milele Rewards, To Let Customers Earn Points Through Their Cards Soko Directory Team
Related Articles
Headlines Are The SACCOS The Infinite Money Glitch Of Kenya? Soko Directory Team
Government and Policy TSC Revises Registration Requirements For Teachers Getrude Mathayo
Headlines Jubilee Health Insurance’s “Always With You” Campaign Wins MSK Award Soko Directory Team
Government and Policy Kenya Is Struggling With Debt As Modest Revenue Is Collected With Limited Development Investment Steve Biko Wafula
Entrepreneur's Corner The Greatest Skill Everyone Should Master Is The Skill Of Knowing How To Manage Money Soko Directory Team
Explore Soko Directory
Banking Blogging Commodity Watch Did you know Entertainment Entrepreneur's Corner Feature Government and Policy Headlines Investment Lifestyle Market News Money Opinion Press Releases Stock Watch Technology
Soko Directory Archives