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The Kenyan shilling’s free fall against the United States (US) dollar has slowed down in recent weeks. CBK boss Kamau Thugge (left) said the shilling found its true value. from the Central Bank of Kenya (CBK) showed that the shilling lost three cents on average against the dollar in December compared to a loss of approximately 12 cents daily in November and 13 cents in the previous month.On Thursday, December 14, the shilling exchanged at 153.3471 against the US dollar according to official CBK rates. In the forex market, the dollar’s selling rate has been in the range of 150 to 160 since mid-August. “We are seeing muted demand for dollars from businesses, as they ease activities towards the holiday season. On the supply side, there are sufficient flows, where we have seen improved (interbank) market efficiency,” a currency dealer was quoted by Business Daily. Why the Kenyan shilling depreciated Kenya’s CBK chief Kamau Thugge said that the country’s currency, currently trading at record lows, has been overvalued for several years. The shilling recorded a decline of almost 24% over a year yet it was around the 100 mark in October 2018.”I think for several years now we have had an overvalued exchange rate. We tried to maintain a fairly artificially strong exchange rate but also at a cost of a loss of international reserves,” said Thugge, who took office in June told a parliamentary committee on Tuesday, October 24. What’s the impact of a weak shilling? The shilling’s sharp depreciation has added to the economic hardship of Kenyans who have been suffering a cost-of-living crisis and the imposition of a range of new or increased taxes. Anger over rising prices, particularly for basics such as food and fuel, led to a series of sometimes deadly protests against the government of President William Ruto earlier this year. He has been accused of breaking promises made during the 2022 election campaign that he would look out for the interests of Kenya’s poor.
by Japhet Ruto