Kenya’s economy is suffering from a lack of capital from abroad. picture alliance / Xinhua News Agency | Wang Guansen
The Kenyan shilling has fallen for the 29th month in a row, according to financial news agency Bloomberg.
This year it has fallen by 18 percent, the sharpest decline in 15 years.
Oil prices and a decline in foreign capital inflows could put further pressure on the currency through 2024.
The Kenya shilling is according to the financial news agency “Bloomberg“ on track to lose value for the 29th month in a row.
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Why the Kenyan shilling is on the decline
Since the beginning of the year, the currency has not only lost around 18 percent in value. But it also looks as if it will suffer its biggest annual loss since 2008.
According to Bloomberg Economics, the sharp decline reflects how capital inflows into the African country have slowed. This in turn can be attributed to the sluggish global financing. In addition, rising oil prices are weighing on the currency as they are expected to increase the country’s current account deficit. What this means is that Kenya consumes more than it produces, meaning it is indebted abroad.
“The shilling could be at 155 by the end of the year,” said Bloomberg economist Yvonne Mhango. That would be even less than the exchange rate this Monday (October 23, 2023: 150.1 per dollar), which is already near a record low.
The Pakistani currency is moving in the opposite direction
The Pakistani rupee, on the other hand, has performed best against the dollar this year. It has risen by eight percent since its record low at the beginning of September.
According to financial services broker HDFC Securities, a subsidiary of Indian private bank HDFC, the recent strength is due to the Pakistani government’s crackdown on illegal dollar transactions. It could somewhat dampen the rapidly rising inflation in the country, which reached 31.4 percent in September.
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“The Pakistani rupee led the world this month as the government’s crackdown on illegal dollar trading helped turn the tide,” the company said in a presentation last week. He continued: “The rupee rose nearly six percent in September, a remarkable performance as most currencies, including the Thai baht and South Korean won, rose against the dollar on speculation that U.S. interest rates would remain high for longer. lost value.”
This article was translated from English by Alexis Haupt. You can find the original here.