Kenyan Shilling Weakens Against the Dollar After 5 Months of Stability
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For the first time in five months, the Kenyan shilling has slipped against the US dollar, ending a long period of unusual stability that puzzled both analysts and international financial institutions.
What Triggered the Weakening?
According to market data, the shilling had traded in a narrow band of KES 129.23–129.26 per USD since June.However, by Friday it eased to an average of KES 129.35, and commercial banks were quoting KES 129.38 by Monday.Forex traders attribute the movement to a tightening of dollar supply, noting that inflows decreased sharply in the last two days. The reduced availability of dollars immediately placed pressure on the exchange rate, causing the slight depreciation.
🧐 Why the Previous Stability Was Unusual
The five-month period of near-flat trading raised eyebrows globally:The IMF flagged the stability as abnormal, warning that it might interfere with natural market price discovery.During this period, the US dollar weakened internationally, yet the Kenyan shilling did not appreciate as expected.Analysts believe the Central Bank of Kenya (CBK) may have been buying dollars to prevent the shilling from strengthening, though the bank insists it only intervenes to manage volatility.
How Kenya’s Currency Performed Against Other Currencies
Despite holding steady against the dollar, the shilling was weaker against several major currencies this year:4.6% down against the British Pound10.5% down against the EuroThis mismatch indicated that the static USD–KES rate was not reflecting broader market dynamics.
🪙 Forex Reserves at a Record High
The Central Bank’s forex reserves recently climbed to USD 12.29 billion, giving the regulator more room to manage volatility. Still, the IMF stressed that exchange-rate flexibility is essential to effective inflation control and economic planning.
🏦🏦 What This Means for Kenyans
🏦 What This Means for Kenyans
Importers
A weaker shilling increases the cost of imported goods—fuel, machinery, raw materials—raising operational expenses for businesses.
Prices of imported items could gradually rise, adding pressure to living costs.
Government and Debt servicing
Kenya’s foreign debt is dollar-denominated. A weaker shilling increases the amount of shillings needed to service these obligations.
Consumers
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