PH
On Monday, the Kenyan shilling fell to a new all-time low of 150 shillings to the dollar, adding to the difficulties of citizens already struggling with rising inflation and a slew of new taxes.
The shilling has been falling for several years and has dropped over 24 percent in the last year, owing to high debt levels and decreased government earnings.
The dollar was selling for little over 150 shillings, according to Central Bank of Kenya data, while some commercial banks and foreign currency bureaux have been trading it at that amount or higher in recent weeks.
According to Ken Gichinga, chief economist of Mentoria Economics, the exchange rate reflected the strengthening of the dollar during the Middle East crisis “which is pushing investors to safe-haven assets” as well as high US treasury yields.
According to Treasury estimates, Kenya had acquired more than 10.1 trillion shillings ($67 billion) in debt by the end of June, equivalent to over two-thirds of GDP.
The cost of servicing the debt, primarily to China, has risen as Kenya’s currency has fallen, and the government also has a $2 billion eurobond maturing in June of next year.
Despite promised during last year’s election campaign to assist ease the financial difficulties of ordinary Kenyans, President William Ruto imposed a slew of new and increased levies early this year to help replenish government coffers.
The global consequences from Russia’s invasion of Ukraine, as well as a terrible regional drought that affected Kenya’s crucial agriculture industry, lowered economic growth last year to 4.8 percent from 7.6 percent in 2021.
Inflation has remained stubbornly high, at 6.8 percent year on year in September, with food and fuel prices continuing to rise.
