The Kenyan Shilling has hit a new all-time low of 145.261 against the US Dollar which could set up the country for more expensive imports and debt servicing distress in an already battered economy.
The local currency on Wednesday slipped lower from 145.15 on Tuesday evening against the greenback as manufacturers and energy traders scrambled for limited supplies in the market.
The Kenyan Shilling has been on a slide since mid-2021 when it stood at Ksh106.54 due to increased demand of dollars by importers and manufacturers coupled with weak inflows.
Further slip will likely hit local consumers as manufacturers and importers pass the cost to buyers, which could hit households that are already struggling harder.
Kenya imports edible oils, petroleum, rice, wheat, machinery, clothes, and fertilisers among other products that account for basics in most families.
Treasury will also be forced to spend more to service Kenya’s debt, pushing the country further as pressure mounts on tax revenues.
“At this rate, the shilling will hit Ksh 150/dollar by October. If our external debt reaches USD 40 billion, it will amount to KSh 6 trillion. This is a frightening prospect considering that the domestic debt is also inching toward the KSh 5 trillion mark. This will push the total public debt to Ksh 11 trillion,” Ephraim Njenga, an economics commentator observed.
“These are eye-watering figures. The country is teetering on the brink of bankruptcy. I wonder where the regime gets the energy and time to engage in premature election campaigns. All hands should be on the deck to save the country’s economy from collapse.”
In the financial year that ended in June, foreign borrowing accounted for about two-thirds of the total debt.
The country started the new financial year with a total debt load of about Sh10.19 trillion, an increase of 18.08 per cent from Sh8.63 trillion last year.
A report released by EFG Hermes in July projected that the shilling may continue to weaken against the dollar and hit Ksh150 by December 2023.
That would shoot up the country’s debt.
By MAUREEN NJERI
Source-https://www.kenyans.co.ke/
Greenback: Kenyan Shilling Sinks To All-Time Low Against The US Dollar
