Shilling hits record low of 108.85 on import pressure

A trader holds bank notes.

The Kenya shilling dropped to a record low of 108.85 units against the dollar on Monday, market data showed, on demand for the greenback by importers. This was despite a fall in the Central Bank of Kenya(CBK) dollar reserves to a five-month low of $8.223 billion (Sh888 billion) or 4.99 months import cover—a sign that the regulator may have acted to support the local currency.

The CBK’s dollar reserve stood at $9.717 billion (Sh1.047 trillion) as at July 2, which covered 5.84 months’ worth of imports. The shilling has come under intense pressure after reopening of the economy as imports pick up despite slower recovery of dollar-earning exports and tourist receipts.

President Uhuru Kenyatta on July 6 started a phased reopening of the country, lifting travel restrictions and allowed air travel to resume. Kenya had in the year to April shipped out $5.9 billion goods and brought in $16.1 billion cargo. The country has also accumulated foreign debt which is repaid by buying dollars, with the latest data showing that foreign debt has hit Sh3.6 trillion, higher than domestic debt at Sh3.4 trillion.

Source: Business Daily Africa,