National treasury building in Nairobi/Photo/courtesy
Nairobi, Kenya, Feb 1-The Kenya shillings has now found some slights relief against the US dollar, pointing towards its stabilizations in the days ahead.
For three days strain the exchange rates of the local unit against its American counterpart has been on a downward trajectory closing the month at Ksh160 buying with a selling rate of Ksh161, a slight shift from its rates yesterday where it closed at Ksh160.5 buying and Ksh161.5 selling against the greenback.
“The Kenya shillings has gained further ground against the US dollar amid increased foreign currency inflows. We expect the US dollar-KF pair to be range bound with the pair direction guided by flows,” said treasury in a commentary to Capital business.
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Last October, Central Bank governor Kamau Thugge while appearing before the National Assembly Finance Committee pointed to an over valued local unit in the wake of a weakening shillings, a factor that has since become a thorn in the flesh of the William Ruto led administration.
He noted that due to the overvaluation of the shilling, the exchange rate was misaligned as compared to foreign deposits leading to a significant increase in the shilling’s depreciation.
“I have to say that we can just maintain an overvalued exchange rate it’s not possible. You’re going to lose all your reserves,” he explained.
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“And the diet medicine will be even worse. Because imagine, you try to maintain a lower value the exchange rate and our level of reserves right now is as I said, it’s just about almost $7 billion,” he pointed out.
