The shilling has weakened to a record low of 108.50 units against the dollar, continuing its losing streak.
The shilling has weakened to a record low of 108.50 units against the dollar, continuing its losing streak. Wednesday’s run marked the tenth straight day for the shilling to trade above 108 units since embarking on a losing streak on August 1.
The weakening is in contrast with 107.70 at the end of July meaning that the local currency has now lost 0.8 units since the month started. Traders attributed the fall on heightened demand of dollars by oil importers given the gradual recovery in petroleum products demand. The latest fall means the shilling has now shed 6.08 units or 5.93 percent of its value when compared with 102.42 units on March 13 when Kenya reported its first Covid-19 case.
Central Bank of Kenya foreign exchange reserves opened the week at $9.249 billion, which is Sh50.7 billion ($468 million) lower compared with $9.717 billion on July 2. The regulator maintains that its forex reserves, an equivalent of 5.6 months import cover, is adequate to deal with volatilities.
The latest weakening of shilling also coincides with high dollar demand by Safaricom which is set to pay its record final dividend of Sh56.09 billion at the end of month, partly in dollars. The telco announced a final dividend of Sh1.40 per share amounting to Sh56.09 billion, up from Sh1.25 or total of Sh50.1 billion paid in the previous year.
Vodafone group, which owns 40 percent stake in the telco will pocket Sh22.4 billion, which is usually paid in dollars. This means the telco has to buy dollars to meet this payout. The shilling has been unstable since mid-March after Covid-19 struck ushering in major economic disruption as the government moved to control spread of the infectious virus. The fall had become pronounced by July 6 when President Uhuru Kenyatta opened up Nairobi, Mombasa and Mandera counties and announced resumption of local air transport.
Source: Business Daily Africa.