Consumers are expected to face further financial distress as the Kenyan Shilling is projected to exceed Sh160 against the dollar.
Last week, Increased demand for the dollar resulted in a significant drop in the value of the shilling despite government efforts to stabilize it.
Traders currently project the shilling surging past the Sh160 threshold against the US dollar.
This situation presents a new challenge for the Kenya Kwanza administration and the banking regulator. According to data from the Central Bank of Kenya (CBK), the shilling reached a historic low of Sh 150.20 against the dollar on Monday.
Major banks have set their selling prices for the dollar between Sh155 and Sh157 per unit, with buying prices ranging from Sh141 to Sh148.
On Thursday, Standard Chartered Bank Kenya quoted the US dollar at Sh155 per unit, while purchasing it at Sh141. Stanbic Bank was selling the dollar at Sh156 and buying at Sh146 per unit.
In the same way as most foreign exchange bureaus, I&M Bank and NCBA were both selling the dollar at different rates per unit. I&M Bank was offering it at Sh156.3 per unit, while NCBA was selling it at Sh156.25 per unit.
The current economic crisis in Kenya has been worsened by the weakening shilling, which is expected to place an additional burden on struggling consumers. Many people have already been pushed into poverty due to the high cost of living.
Moreover, the depreciating shilling is now a threat to fuel prices, which has already caused public outrage.
Kenya heavily relies on imported goods, thus, the weakening of the shilling will pose a substantial setback. Experts predict that if the domestic currency depreciates any further, it will further exacerbate the already sky-high living costs, resulting in an increasingly dire situation for households already struggling to make ends meet.
The impending outcome signifies that the nation’s mounting electricity expenses and ever-increasing debt servicing challenges are likely to persist.
With the persistent rush to grab the currency, the hunt for hedging and trading purposes could drive up demand for dollars, leading to even higher purchase prices.
Despite the Central Bank of Kenya’s strict penalties on forex market manipulation and a government-supported fuel import agreement, the local currency has continued to decline since the beginning of the year.
