The Kenyan shilling declined to a record low of 160 against the U.S. dollar Thursday, exerting pressure on the East African nation’s falling foreign exchange reserves and raising the cost of imports.
The Central Bank of Kenya (CBK) said the local currency was exchanging against the dollar at 159.8 in Thursday’s trading, representing about a 27 percent fall year-to-date.
As of Jan. 5, the forex reserves stood at a low of 6.78 billion dollars, corresponding to only 3.62 months of import cover. The reserves have fallen by about 1 billion dollars in a year.
The fall of the shilling has been blamed on a faster monetary policy tightening in advanced economies, which has led to declined inflows.
Besides the dollar, the shilling has also declined against the pound sterling and the euro.
Against the pound sterling, the central bank on Thursday placed it at an all-time low of 204 from 182 in October 2023 and the euro at 175.
The declined shilling, however, is expected to boost the country’s earnings from exports like coffee, horticulture and tea as exporters would earn more.
Kenya’s inflation stood at 6.6 percent in December 2023, a slight fall from 6.8 percent in November same year mainly due to higher fuel prices as well as pricey imports.
