The government’s apparent cluelessness on how to salvage the rapidly depreciating Kenya Shilling against the US dollar continues to manifest with the State now projecting that the local currency will sink to 150.
According to the National Treasury, the shilling will sink to Sh. 150.76 by June next year when the government will pay off Sh. 301,513,774,986 for $2 billion international sovereign bond.
The Shilling has already breached the 140 to the dollar mark and has been losing between one and two shilling every two weeks. This indicates that if current depreciation trend is maintained, the Shilling might sink to between Sh. 150 and Sh. 160 between October and December this year.
The Shilling’s depreciation has gotten worse under the presidency of Dr. William Ruto. Alarmingly, the government has exhibited cluelessness and helplessness on how to salavage the local currency.
In April 2023, Dr. Ruto claimed that the Shilling would recover to between Sh. 120 and Sh. 115 given the measures the government had undertaken to tame its slide. At the time, the Shilling was trading at 134 to the Dollar.
“Today as a country we can buy fuel in Kenyan shillings, something that many people never thought would be possible. From this month of April, all our fuel marketers will be able to buy our fuel products in Kenya shillings and it will reduce pressure on our dollars,” Ruto claimed.
“In fact in the next one month or so you will see the dollar exchange rate coming down in a very phenomenal way. In fact in my estimation, in the next couple of months, the exchange rate will come below Sh.120, maybe Sh.115.”
Currently, foreign exchange reserves as at June 15 were at Sh. 1.046 billion ($7.459 billion), enough to cover the country’s import needs for 4.11 months.
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This increase in the stockpile of the country’s foreign currencies is due to a disbursement of Sh. 140.2 billion ($1 billion) disbursement from the World Bank to support fiscal consolidation.
New Central Bank of Kenya Governor Dr. Kamau Thugge has planned to issue a local dollar-dominated bond to shore up the falling Shilling.
Thugge had made this proposal when he appeared before a parliamentary committee for his vetting to the position of Governor.
“One of the things that I would like to explore with the National Treasury is the possibility of actually issuing a dollar-denominated bond, the way we issue an infrastructure bond, and we structure it and sell it locally,” Thugge had said.
“If we can get those Kenyans who are holding dollars in their deposits to buy into it… we will have a possibility of actually increasing the liquidity of dollars in the system but also building up foreign exchange in the Central Bank.”
However, this was rubbished as a slippery slope that would have more cons than pros on the Shilling by immediate former CBK Governor Dr. Patrick Njoroge.
