The Kenyan shilling hit a record low of 150 against the dollar on Monday.
Last week, the Kenyan shilling depreciated against the US dollar by 0.4% to close at Kshs 149.8, from Kshs 149.1.
“On a year-to-date basis, the shilling has depreciated by 21.4% against the dollar, adding to the 9.0% depreciation recorded in 2022. We expect the shilling to remain under pressure in 2023,” according to Cytonn Investments.
The depreciation of the shilling has been driven by high debt levels and dwindling government revenues.
Central Bank of Kenya data indicates that the dollar is trading slightly over 150 shillings.
Commercial Bank Rates for Currencies 23 October 2023
|KES / USHS||25.0211||24.9711||25.0711|
|KES / TSHS||16.6652||16.6208||16.7096|
|KES / RWF||8.1492||8.0872||8.2113|
|KES / BIF||18.9147||18.7988||19.0306|
SOURCE: COMMERCIAL BANKS
The Kenyan shilling, despite recent depreciation, is expected to find support from two key factors:
- Diaspora Remittances: As of September 2023, diaspora remittances stood at a cumulative USD 3,106.7 million, marking a 3.8% increase from the USD 2,992.5 million recorded over the same period in 2022. This steady flow of remittances has played a crucial role in cushioning the shilling against further depreciation.
- Tourism Inflow Receipts: The tourism sector also provided substantial support, with inflow receipts reaching USD 268.1 billion in 2022. This represents a significant 82.9% increase from the USD 146.5 billion recorded in 2021.
These factors are expected to provide a buffer for the Kenyan shilling in the face of economic challenges.