Kenyan Shilling Still On A Free-Fall Despite CBK’s Desperate Moves

There seems to be little hope for the Kenyan shilling against the US Dollar as it continues to ignore noises calling for its rescue, falling further against the US Dollar even as the Central Bank of Kenya desperately tries to pull it out of the deepening waters.

On Wednesday, the Central Bank of Kenya (CBK) issued Kenyan banks with a new foreign exchange code that was aimed at directing dollar transactions, failure to which banks were to face fines and license suspension. Even with the code, the shilling is still falling.

As the efforts go on, rates quoted for dollar buyers in banking halls on Thursday ranged from 136 shillings to 143 shillings, and between 127 shillings and 128.60 shillings for those offloading the dollar to banks. This is despite the warning by President William Ruto to those “hoarding the dollar.”

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On Wednesday, Kenyan banks were selling dollars at between 136 shillings and 142 shillings, down from a range of 140.55 shillings and 144.50 shillings a week earlier.

At the same time, the CBK’s official rate on Thursday stood at an average of 130.99 shillings per dollar, having depreciated from 130.61 shillings on Wednesday.

“One of the primary reasons for the shortage of dollars in Kenya is the country’s trade deficit. The country imports more than it exports, which means that it requires more foreign currency to pay for these imports. This trade imbalance has been exacerbated by the pandemic, which has disrupted global supply chains, making imports more expensive,” says Soko Analyst.

Related Content: Kenyan Shilling Falls Deep Into A Hole, Deepest In History

The dollar shortage in the country has hit hard on the local currency, affecting manufacturers who use the dollar to import goods from other countries into the country. President William Ruto had called on those holding onto the dollar to release it or “face the consequences.”

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