Kenya shilling touches low 113 mark

The Kenyan shilling has continued to descend into new lows having touched the Ksh.113 mark against the U.S dollar at the close of trading on Thursday.

The local unit which has been trading in historical low territory since the beginning of November was quoted at Ksh.113.02 to the dollar as its weakened run continues.

Pressure on the shilling continues to be closely linked to increased dollar demand as import costs rise on prevailing supply chain constraints.

Analysts expect the local unit to remain on the ropes as dollar demand peaks at the end of the year.

“We expect sustained pressure on the shilling in the weeks ahead as retail and wholesale dollar purchasers’ rush to meet their year-end obligations,” Terry Karanja, a Treasury Associate at currency broker AZA Finance stated in a note earlier this month.

The weakening of the local unit is in spite of interventions by the Central Bank of Kenya (CBK) through open market operations including the sale of dollars to the market and the sale of repurchase deeds (repos).

CBK interventions have been mirrored in the fall of its usable foreign currency store which currently stands at an equivalent 5.34 months import cover.

The CBK has maintained a calm note on the weakening of the local unit stating that the valuation of the shilling is indifferent to the valuation of other major world currencies as they too feel the impact of a strengthened green buck.

The shilling has shed an estimated 3.42 per cent of its value against the US dollar in the year to date.