With all factors constant, the Kenyan shilling is headed towards the 160-shilling mark against the US Dollar, kicking off the day at 157 shillings, the lowest the local currency has ever fallen since Kenya got independence, leaving Kenyans and businesses worried.
Friday morning, Kenya’s Satellite Forex Bureau was buying the US Dollar at 155.2 shillings and selling the same at 157 shillings. This means that Kenyans with US Dollars can get more Kenyan shillings if they decide to exchange today at Bureaus such as Satellite.
When he was asked about the fate of the Kenyan shilling, the Central Bank of Kenya (CBK) Governor Dr. Kamau Thugge, said that the CBK will not intervene to save the shilling. He says they have decided to leave the shilling fall until it stabilizes on its own.
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“I think for several years now, we have had an overvalued exchange rate if you go back six years ago there was a raging debate as to whether the Kenyan shilling exchange rate was overvalued and at that time the Bretton Woods institutions felt that the exchange rate was overvalued by anywhere between 20 to 25 percent,” Dr Thugge said.
Dr. Thugge added; “The over-valuation became obvious last year. Inflation last year went beyond what had been seen for decades. The US raised interest rates by 500 basis points.”
Since the beginning of the year, the shilling has depreciated by 17.7 percent against the dollar, which is more than double the 8.3 percent it shed against the greenback in the whole of 2022.
“Most African currencies have weakened against the US dollar, partly reflecting global strengthening of the US dollar,” Dr Thugge told the Finance and National Planning Committee of the National Assembly. “Policy tightening in major economies partly contributed to the global strengthening of the US dollar.”
Dr Thugge appeared before the committee chaired by Molo MP Kuria Kimani to explain the measures the CBK was putting in place to reverse the shilling losses against the US dollar.
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