Kenyan Shilling Falls To Ksh 161.5 Against The US Dollar

By Juma / Published January 11, 2024 | 12:35 pm

The melting of the Kenyan shilling has gained momentum in the new year with the local currency falling to the lowest in the history of the country, kicking off the day on Thursday at 161.5 shillings against the US Dollar.

As of Thursday morning, according to Satellite Forex Bureau, the local currency was going for 159 shillings against the US Dollar buying and 161.5 shillings against the US Dollar selling.

On Wednesday, the shilling kicked off the day at 159 shillings buying and selling at 160 shillings before ending the day at 161 shillings.

Analysts are predicting doom for the Kenyan shilling against the US Dollar with some saying that it will fall as further as 200 shillings against the US Dollar.

Last week, the Kenya Shilling depreciated against the US Dollar by 0.9 percent to close at 157.9 shillings, from 156.5 shillings recorded the previous week.

On a year-to-date basis, the shilling has depreciated by 0.6% against the dollar, adding to the 26.8% depreciation recorded in 2023.

Experts expect the shilling to remain under pressure in 2024 as a result of:

An ever-present current account deficit which came at 3.5% of GDP in Q3’2023 from 6.4% recorded in a similar period in 2022,
The need for government debt servicing, continues to put pressure on forex reserves given that 67.1% of Kenya’s external debt was US Dollar denominated as of June 2023, and,
Dwindling forex reserves, currently at USD 6.8 mn (equivalent to 3.6 months of import cover), which is below the statutory requirement of maintaining at least 4.0 months of import cover.

The shilling is however expected to be supported by:

Diaspora remittances which stood at USD 3,817.4 mn as of November 2023, 4.0% higher than the USD 3,670.6 mn recorded over the same period in 2022. In the November 2023 diaspora remittances figures, North America remained the largest source of remittances to Kenya accounting for 57.2% in the period, and,
The tourism inflow receipts which came in at USD 1.06 bn in the first half of 2023, a 31.3% increase from USD 0.81 bn inflow receipts recorded over a similar period in 2022, and tourist arrivals improved by 34.1% in the 12 months to October 2023, compared to a similar period in 2022.

Key to note, Kenya’s forex reserves increased during the week to USD 6.8 from USD 6.6 bn recorded the previous week, equivalent to 3.6 months of import cover higher than 3.5 months of import cover recorded the previous week, but remained below the statutory requirement of maintaining at least 4.0 months of import cover.

About Juma

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

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