The Kenya Shilling depreciated by 7.7% in 2020.
The currency closed at Kshs 109.2 against the US Dollar, compared to Kshs 101.3 recorded at the end of 2019.
According to Cytonn Investments, the depreciation was driven by the decline in dollar receipts from dollar-earning sectors such as tourism and horticulture in addition to high demand for hard currency from investors.
Consequently, the county’s foreign exchange reserves have been on the decline but well 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.
Cytonn maintains a neutral stance for the currency as it remains under pressure as the dollar demand for trade and government debt service outweighs the dollar inflows as some of the sectors like tourism are affected.