The Kenya shilling weakened over the festive season to trade at Sh123 against the US dollar further raising risks on cost of servicing Kenya’s debt.

Data from the Central bank website indicates that the currency is currently trading at Sh123.33 to the dollar compared to Sh122 at the beginning of December last year.

“The Kenya Shilling remained stable against major international and regional currencies during the week ending December 29. It exchanged at Sh123.33 per US dollar on December 29, compared to Sh123.16 per US dollar on December 22,” Central bank of Kenya (CBK) said in its latest weekly bulletin.

Kenya’s forex reserves however improved to 4.17 months of import cover in December compared to 3.9 months early December after a deal with the International Monetary Fund (IMF) moved to avail over Sh50 billion in funding to the National Treasury.

Exchange rates

“The usable foreign exchange reserves remained adequate at $7.44 billion (4.17 months of import cover) as at December 29. This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover,” said CBK.

The exchange rate loses, however, mean well for exporters who will reap higher gains from their sales in foreign currency. Importer demand is expected to set in this month after a lull in the holidays season in what could add more pressure on the currency.

Overall inflation declined further to 9.1 per cent in December 2022 from 9.5 per cent in November due to easing food prices with the favourable rains and declining international prices of edible oils. Food inflation declined to 13.8 per cent from 15.4 per cent in November. Fuel inflation declined to 12.7 per cent from 13.8 per cent in November.