This archive report was first published on 26 October 2021.
On October 26, 2021, the Central Bank of Kenya (CBK) reported that the shilling had hit a 10-month low against the dollar, with commercial banks quoting the local currency at an average of 111.12 units against the greenback.
This depreciation is expected to increase the cost of imported goods, including cars, medicine, and pharmaceutical products, plastics, electronics, clothing, and shoes.
According to economist Tony Watima, the shilling's decline is due to an artificial shortage of dollars accompanied by global demand for goods.
Watima noted that the CBK's dollar sales in the open market had been reduced, forcing banks to use their deposits and set a higher margin.
Foreign exchange reserves have been declining in the last six weeks, standing at Sh1.02 trillion currently.
Despite the CBK's assurance that the usable foreign exchange reserves remained adequate at $9.228 billion, which meets the statutory requirement to maintain at least four months of import cover, the depreciating shilling threatens to pile fresh pressure on fuel prices.
As of October 2021, petrol was retailing at Sh129.72 per litre, diesel at Sh110.6, and kerosene at Sh103.54.
