Kenyan Shilling Remains Stable Against Dollar as CBK Reports Increase in Inflation

 

Kenyan shilling (l) and US Dollar bills (r) used for illustration. Kamu Thugge (c) is the governor of the Central Bank of Kenya. 

The Central Bank of Kenya (CBK) has reported a continued stabilisation of the exchange rate. Kenyan shilling (l) and US Dollar bills (r) used for illustration. Kamu Thugge (c) is the governor of the Central Bank of Kenya. CBK reported that the KSh remained stable against major international and regional currencies during the week ending September 5. "The Kenya Shilling remained stable against major international and regional currencies during the week ending September 5. It exchanged at KSh 129.19 per US dollar on September 5, compared to KSh 129.04 per US dollar on August 29," CBK said in a weekly bulletin.  Kenyan shilling exchange rates. Inflation rises marginally CBK further reported that overall inflation for August 2024 rose to 4.4%, largely due to fuel inflation. "Overall inflation increased marginally to 4.4 percent in August 2024 from 4.3 percent in July 2024. Food inflation declined to 5.3 percent from 5.6 percent in July, mainly supported by decreases in prices of key vegetable items. Fuel inflation increased marginally to 4.7 percent compared to 4.5 percent in July 2024, mainly on account of increases in select prices of energy and transport items. Non-food non-fuel (NFNF) inflation edged up slightly in August, mainly reflecting increases in price of cigarettes. It increased to 3.5 percent from 3.3 percent in July," CBK explained. Speaking to TUKO.co.ke, Daniel Kathali, an economist, explained that the ongoing stabilisation of the Kenyan currency can be partly attributed to the low inflation rates recorded in recent months. "When inflation rates were high, the shilling lost its purchasing power, which meant you needed more to purchase things, and this made Kenya's products less competitive in the international market. Additionally, the lowering of the inflation rates has reduced the demand for cheaper imports in Kenya, which has reduced the demand for foreign currencies, hence the stabilisation of the currency. This is just a part explanation because there are other factors, such as the CBK interest rates and dollar inflows, which have also contributed," Kathali explained. 

by  Elijah Ntongai