Ksh losses 20 percent of its value against regional (EAC) currencies
2 min read
EAC currencies gain against the dominant Kenyan shilling (Ksh) with the currency losing nearly 20 percent of its value
EAC currencies gain against the dominant Kenyan shilling (Ksh) with the currency losing nearly 20 percent of its value.
In less than a year, the Kenyan shilling has lost about 20% of its value relative to regional currencies, diminishing its dominance in the area and hurting importers of products from Tanzania and Uganda.
When compared to mid-July of last year, the value of the Kenyan currency has decreased by around 19.7 percent against the Uganda shilling, and by 12.1 percent and 4.4 percent, respectively, against the Tanzania shilling and the Rwandese franc.
According to Central Bank of Kenya (CBK) figures, at the start of trade last Friday, one Kenyan shilling was selling for an average of USh25.80, Tsh17.30, and Rwf8.30.
When compared with March 2020 when the Covid-19 disruption set in, the Ugandan currency has gained about 29.5 percent against the Kenya shilling.
Tanzanian shilling and Rwandese franc have gained 24.1 percent and 10.7 percent against the Kenyan currency in this period.
The continued weakening of the Kenyan shilling against the currencies of Uganda, Tanzania, and Rwanda means that Kenyan exports into the region are fetching far much less than before.
The declining value of the Kenyan currency (KSh) against that of its neighbours’ mirrors the performance of the shilling against the world’s major currencies, including the US dollar and the sterling pound.
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Since mid-July of last year, the Kenya shilling has fallen 19.5 percent versus the dollar and 32.1 percent against the English pound.
The Kenyan shilling’s depreciation versus the dollar has exposed the nation to higher import prices as well as increased costs for servicing its dollar-denominated loans.
Kenya largely depends on imports for its consumer and capital goods, especially fuel and industrial raw materials, meaning that the disadvantages of a weaker currency are more pronounced than the gains on exports.
Official data show that Kenya’s overall balance of payments position worsened to a deficit of Sh127.8 billion in the first quarter of 2023 as the cost of serving debts shot up.
“During the quarter under review, there was a depletion of gross official reserves towards servicing of public external debt,” says the Kenya National Bureau of Statistics.
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