NAIROBI, Kenya, Feb 1 – The Kenyan shilling’s downward depreciation against the American dollar is starting to show some signs of slowing down amid an inflow of foreign currencies.
The NCBA Treasury Department is today selling $1 for Sh161, down from Sh161.5 yesterday.
Sky Forex, which offers money exchange services, is also selling the greenback at Sh162.5. Yesterday, the same unit was going for Sh165.
Last month, the Board of the International Monetary Fund (IMF) approved $942.2 million to Kenya under the Extended Fund Facility (EFF) as well as the Extended Credit Facility (ECF).
IMF said then that the country would access $624.5 million immediately from the facility.
“The Kenya shillings has gained further ground against the US dollar amid increased foreign currency inflows,” said the NCBA Treasury Department.
“We expect the US dollar-KF pair to be range bound with the pair direction guided by flows,” it added.
While appearing before the National Assembly Finance Committee last October, Central Bank of Kenya governor Kamau Thugge said that the local unit was overvalued.
Due to the overvaluation of the shilling, Thugge said that the exchange rate was misaligned as compared to foreign deposits, resulting in a downward spiral for the shilling.
“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 said.
“And the diet medicine will be even worse. Because imagine, you try to maintain a lower value of the exchange rate and our level of reserves right now is as I said, it’s just about almost $7 billion.”
