Kenyan shilling hits historic low against US dollar
By Francis Muli, January 15, 2024
The Kenyan shilling has hit a historic low against the dollar, sinking below the Ksh160 mark on Monday, January 15, 2024.
According to official data by the Central Bank of Kenya (CBK), one US dollar was costing Ksh160.2384 as of Monday, January 15.
The Sterling Pound had hit a high of Ksh204.7687 while the Euuro was going at Ksh175.9498.
In December, CBK hiked the benchmark lending rates to the depreciation of the shilling against major international currencies.
In December 2023, CBK raised the benchmark lending rate to a historic high of 12.5 per cent from 10.5 per cent, attributing it to the sinking shilling against the dollar, which now contributes close to half of the country’s inflation levels.
“We thought the shilling had been overvalued for quite some time, there has since been significant adjustments and we now feel that the shilling has depreciated enough and actually may have overshot the rate required for equilibrium,” CBK Governor Kamau Thugge said on December 6, 2023.
Several entities recorded slumped profits in part 2023, most of which were attributed to paper loss due to the depreciating shilling.
Shilling’s value in August 2022
The shilling has depreciated from Ksh119.12 per dollar in August 2022 to the current rate of Ksh160.24.
The Kenyan shilling has also depreciated against the Ugandan and Tanzanian shillings, trading at Ksh24.09 and Ksh15.88 respectively.
The weakening shilling has also affected Kenya’s external debt, ballooning it to new highs.
“The Committee noted that public sector external debt service has risen, thereby offsetting some of the gains made towards the Government’s strong fiscal consolidation,” CBK stated.
In the domestic market, commercial banks will be forced to increase the interest rates of the loans extended to businesses and households.