The Bloomberg has termed the deteriorating Kenya Shilling as the second worst performing currency in Africa so far in 2024.
The Bloomberg has also quoted that financial experts are expecting the Shilling to hit lows of 210 against the US dollar by December 2024.
“The worst-case scenario among five analysts and traders polled by Bloomberg is for the shilling to depreciate to as low as 210 against the US currency by the end of the year, with the mildest forecast at 171,” the Bloomberg reported.
According to the official indicative exchange rate by the Central Bank of Kenya, the Shilling on Tuesday opened the day at 161.3576 against the US dollar.
However, commercial banks and forex bureaus are selling at highs of between 165.75 and 168 per dollar. A spot check on Tuesday showed that Satellite Forex Bureau was selling the dollar at 165.5 and buying at 163.2.
Pacific Forex Bureau was selling the dollar at 166.5 and buying at 162 per unit. Among commercial banks, the NCBA Bank was buying the dollar at 160.25 and selling the same at 165.75.
At the same time, the Shilling is widely being quoted as trading at 163 per dollar, which is also higher than the official CBK rate. The official CBK rates are usually based on interbank rates which are similar to wholesale prices. They are different from the retail rates a buyer gets from the commercial banks and forex bureaus.
“New funding pledges of nearly $900 million ahead of a Eurobond repayment deadline are failing to defend Kenya’s shilling from fresh lows, with analysts forecasting further weakness as the rising cost of imports heightens demand for dollars,” the Bloomberg has reported.
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The projections by Bloomberg mirror projections by Sanlam Investments. According to Sanlam, the Shilling is expected to continue its depreciation throughout the year 2024.
“We expect the shilling to depreciate in 2024 but face less pressure than 2023 as the Central Bank of Kenya has increased interest rates and US interest rates are projected to decline,” Sanlam says in its Sanlam Investments East Africa Limited (SIEAL) 2024 Investment Themes and Outlook report.
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