The Kenya shilling in April slumped to an all-time low exchanging at 115.8 units against the dollar on increased dollar demands by importers and corporates.
This was a 0.7 percent depreciation from Kshs 115.0 recorded at the end of March 2022.
The demand has been on the back of increased global oil prices against a slower recovery in exports and in the tourism sector according to Cytonn Investment Analysts.
“On a year-to-date basis, the shilling has depreciated by 2.3 percent against the dollar, in comparison to the 3.6 percent depreciation recorded in 2021,” they note,
A weak shilling leads to an increase in the cost of imports as more units of the local currency are now needed to exchange for the hard currencies.
The shilling is, however, expected to be supported by: high Forex reserves currently at USD 8.4 bn (equivalent to 5.0-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.
In addition, the reserves were boosted by the USD 750.0 million World Bank loan facility received in March 2022 and are expected to be boosted further by the expected USD 244.0 billion from the International Monetary Fund (IMF), and,
In addition, remittances, Kenya’s largest source of foreign exchange, are evidenced by a 25.0 percent y/y increase to USD 363.6 million as of March 2022, from USD 290.8 million recorded over the same period in 2021.