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Kenya Shilling soars in two weeks to trade at 156.7 against US Dollar

Directline is said to control more than 60 per cent of the public service vehicles (PSVs) insurance market. (Photo: File)

By Saleem Abdi | Wednesday, February 14, 2024

The shilling has been on a positive trend over the past two weeks, much to the relief of businesses that import goods.

The Kenyan Shilling continued to rally against the US Dollar to exchange at 156.7 units on Wednesday- based on official Central Bank of Kenya rates- marking two weeks since the local currency started appreciating against the greenback.

The exchange rate on Wednesday marked a 2.5 per cent gain on the Kenyan Shilling within just two weeks, from a rate of 160.75 units against the USD by January 31, which was the peak.

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The shilling has been on a positive trend over the past two weeks, much to the relief of businesses that import goods, and the government which is in much need of the dollars to service debts.

The local currency had been on a steep depreciation whole of last year, exerting pressure on businesses which had to incur a lot more to be able to import raw materials and goods, raising the cost of doing business.

In 2023, the shilling shed about 20 per cent of its value, which had a heavy cost on the government when servicing debts, as well as businesses importing goods and raw materials, leading to a high cost of living.

External debts for the government, for instance, increased by Sh450 billion in just five months to November 2023, heavily due to the depreciation of the shilling.

“Public and publicly guaranteed external debt increased by 4.1 per cent during the first quarter of 2023/24. This increase was majorly driven by disbursements from multilateral lenders and exchange rate movements,” the CBK had indicated a month earlier, in the 2023/24 Q1 review report.

The peak of the shilling depreciation was on January 31 when it exchanged at 160.75 units against the US Dollar, and on February 1 when it exchanged at 174.49 units against the Euro.

When the year started, the Shilling exchanged at 156.5 units against the Dollar, and at 173.65 units against the Euro.

The impact of the shilling gaining value against the US Dollar will permeate across the economy since imports get cheaper and government costs come down.