NAIROBI, Kenya
Rising demand for the US dollar from importers of oil and subsidiaries of multinationals seeking to repatriate profits continued to exert pressure on the shilling, pushing it to a 28-month low.
The shilling continued its slide towards the Sh88 to the dollar mark as analysts said they expected it to break the barrier any time and stay at that level for some time. “I see the shilling breaking through the Sh88 barrier between today (Wednesday) and Friday, judging by the heavy demand we are getting from the energy and manufacturing sectors,” said Robert Gatobo, a forex dealer at Bank of Africa.
He said inflows remained depressed because of persistent challenges in certain export sectors such as tourism. A weakening of the shilling at a time when the country is preparing to make large imports of maize, oil and machinery raises the prospect of an increased scramble for dollars, which will only add downward pressure on the local currency.
It also means Kenya’s import bill will rise significantly even as the inflow of dollars from traditional sources such as tourism remain depressed in the wake of recent travel warnings by Western governments. A weaker shilling also bears the potential of increasing the burden of servicing Kenya’s foreign debt, which currently stands at more than Sh1 trillion.
(BUSINESS DAILY, www.bdafrica.com)
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