The Kenya Shilling remained under pressure, having depreciated by 0.3 percent against the US dollar to close the week at 141.8 shilling from 141.4 shillings recorded the previous week.
The drop in the local currency during the week was partly attributable to the persistent high dollar demand from importers, especially in the oil and energy sectors.
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On a year-to-date basis, the shilling has depreciated by 14.9 percent against the dollar, adding to the 9.0 percent depreciation recorded in 2022.
Pressure on the shilling will continue coming from an ever-present current account deficit, which came at 2.3 percent of GDP in Q1’2023 from 4.2 percent recorded in a similar period last year.
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At the same time, the need for government debt servicing that continues to put pressure on forex reserves given that 66.8 percent of Kenya’s external debt is US Dollar denominated as of April 2023 will pile pressure on the Kenyan shilling.
The shilling is however expected to be supported by diaspora remittances stood at a cumulative USD 2,033.8 million in 2023 as of June 2023, albeit 0.5 percent lower than the USD 2,044.6 million recorded over the same period in 2022.
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The tourism inflow receipts came in at Kshs 268.1 bn in 2022, a significant 82.9 percent increase from 146.5 billion shillings inflow receipts recorded in 2021 as shown.
At the same sufficient forex reserves are currently at USD 7.9 bn (equivalent to 4.3 months of import cover), which is above the statutory requirement of maintaining at least 4.0 months of import cover.
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