Soaring Exchange Rates as Dollar Hits Sh115
The dollar this Monday hit an all-time high against the shilling evident to higher imports costs on goods.
This loss coinciding with the conflict between Russia and Ukraine as global concerns have risen on oil inflationary pressures. Since Russia is the third global producer of oil.
The Central Bank of Kenya (CBK) data shows the Kenya shilling exchanged at an average of sh115 on Monday, setting up the country for more expensive charges as from imports to electricity and debt servicing.
According to governor Patrick Njoroge of Central Bank of Kenya, the CBK foreign exchange reserves that stand at $7,850 million (4.80 months of import cover), continue providing adequate cover and buffer against any short-term shocks in the foreign exchange market.
He said this following a Monetary Policy Committee meeting on March 29.
As the data shows the country’s foreign currency reserves held by CBK dropped to $7.85 billion (equivalent to 4.66 months of imports) as at March 31, 2022, from $7.84 billion as at 24 March 2022 (which was equivalent to 4.80 months of imports).
Depreciation in the shilling and high petroleum prices threaten to put pressure on fuel prices, hurting households through high food prices as well as pushing up living costs.
This is causing a public anger that’s in turn forcing the government to retain subsidies in a bid to ease the consumer burden.
The incessant back foot in recent weeks of weak inflows and strong dollar demand across sectors has seen the CBK intervene to cushion further loss.
There has been strong dollar demand from various sectors which has outstripped lackluster inflows, traders said.