Consumers to pay more as shilling slides against the dollar
FOREX: Kenyan households may soon be struggling to make ends meet as the shilling continues to weaken against US dollar, pushing a hike in the cost of imports, a new report has warned.
Money market analysts are of the view that the local currency is likely to depreciate further as the world slowly rises from vagaries of coronavirus, pushing up the cost of living as importers pass hiked bills to consumers.
A new report by Cytonn, an investments management firm, notes that the shilling has depreciated by 7 per cent year to date, in comparison to the 0.5 per cent appreciation last year.
“In our view, the shilling will come under pressure due to increased dollar demand from merchandise importers as the easing of coronavirus restrictions jumpstart economic activities amid a deteriorating current account position,” adds the report.
It says the support is mainly emanating from the high forex reserves.
The shilling edged down on Friday mainly due to demand for dollars from importers, amid a lack of firm offers from sellers.
At the beginning of trade, commercial banks posted the shilling at 108.45/75 per dollar, compared with Thursday’s close of 108.40/60.
Yesterday, the local currency edged down against the dollar as serious dollar sellers remained on the sidelines, in spite of demand for the hard currency from importers.
Commercial banks posted the shilling at 108.50/70 at the opening of trade, compared with Friday’s closing rate of 108.45/65.