The shilling has officially crossed the 160 units points against the US dollar, the lowest level on record.
On Monday, the Central Bank of Kenya (CBK) quoted the local currency trading at 160.23 units against the greenback, compared to 159.85 end of last week.
Image: FILE
The shilling has been falling against major international currencies since 2020, an aspect the apex bank blames on its overvaluation.
“I think for several years now, we have had an overvalued exchange rate. We have tried to maintain a fairly strong exchange rate artificially, [but] at the cost of losing international reserves,” CBK governor Kamau Thugge told the Parliament in October.
He said that the World Bank and the International Monetary Fund considered the shilling to be between 20 per cent and 25 per cent overvalued five years ago.
He added that Kenya’s foreign exchange reserves had dropped significantly and could only cover less than four months of imports. He said, “This is still sufficient to deal with any emergencies.”
The depreciation of the shilling has contributed to the high cost of living currently witnessed in the country as importers pass the extra bill to consumers.
The consumer price index, a measure of the price of goods and services purchased or otherwise acquired by households reached a record high of 137.55 points in December 2023, according to the Kenya National Bureau of Statistics (KNBS).
The country’s CPI has averaged 45.34 points since 1984.
Last week, data by Bloomberg rated Kenyan shilling among the worst-performing currencies on the continent last year.
The finding placed the Kenyan currency at number seven in Africa after shedding 20.9 percent against the American dollar.
However, the Nigerian Naira plunged the steepest, having depreciated by 55 percent.
The Malawian national currency (Kwacha) depreciated by 39.1 percent, while its Zambian counterpart followed at 29.5 percent in depreciation. Other currencies on the list include the Burundi and Congolese francs, which have depreciated by 27.6 percent and 24 percent, respectively.
Source: The Star
