The Kenya Shilling’s persistent drop against the US dollar has led to a new record low of Ksh.119.
After retreating from the Ksh.119 mark in late trade on Monday, the local currency crossed the mark at the start of trading on Tuesday.
The main cause of Kenya Shilling’s persistent depreciation is a stronger dollar, which has caused all other major foreign currencies to decline in value versus the US dollar.
Foreign investors have been withdrawing money from emerging and frontier economies in favor of holding dollar assets, which has been correlated with the stronger currency and rising interest rates in the US.
Governor of the Central Bank of Kenya (CBK), Dr. Patrick Njoroge, allayed worries about a severe depreciation in local currency while attributing the weakening of the Shilling to the emergence of the dollar as the world’s reserve currency.
“Some of the dynamics we have observed in our own foreign currency market are being driven by the US dollar’s rise relative to a basket of global currencies. Those who are worried about the currency dropping drastically should be aware of the factors at work.” He said.
While the US dollar and regional currencies like the Tanzanian and Ugandan shillings have declined against the shilling, the local money has surged against the Euro, British pound, South African rand, and Japanese yen.
Subscribe to our YouTube Channel at Switch TV
The Kenyan shilling has lost value relative to the US dollar by an estimated 5.3% so far this year.
Higher exports and remittances from the diaspora are predicted to give the local unit some relief from rebounding foreign currency inflows.
