The Kenya shilling touched a new low of Ksh.114 in intra-day trading on Monday with the unit setting yet another all time low.
Bloomberg’s Kenya shilling spot market indicator quoted the local unit at Ksh.114.09 against the US dollar after closing Friday’s session at Ksh.113.96.
The weakness in the local unit has in the past week been exacerbated by the economic fallout from Russia’s invasion of Ukraine with the former being a key source market for crude oil in the world.
In just nine days for instance, Murban oil prices spiked to Ksh.13,592 ($119.23) per barrel from Ksh.11.474 ($100.65) on February 24.
The Russia-Ukraine conflict has seen commodity prices including LPG soar on supply chain constraints.
The rising crude/energy sector prices has led to increased dollar demand causing the continued weakness in the local unit.
Benchmark crude futures surged to near the $130 mark this past weekend as the US announced it was mulling placing sanctions on Russia’s crude exports.
The benchmark prices have nevertheless pulled back at the start of the week.
Other factors attributed to the shilling’s falling valuation to the dollar include rising interest costs on foreign currency denominated debt and a widening current account deficit.
Nevertheless, the local unit is still supported by high foreign currency reserves which stood at Ksh.900.6 billion ($7.9 billion) as of March 3 or a respective 4.8 months import cover.
At the same time, improving diaspora remittances are set to cushion the shilling from further depreciation.
In the year to date (YTD) the unit has shed 0.84 per cent of its value against the greenbuck having opened the year at Ksh.113.16.
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