, NAIROBI, Kenya, July 6 – The Kenya shilling has hit the 100 mark against the US dollar for the first time since October 2011 causing anxiety in the forex market.
In the daily rates by Central Bank of Kenya (CBK) the dollar was buying at Sh99.88 and selling at 100.06.
Traders have attributed the continued weakening of the shilling to strengthening of the dollar across the globe as well as widening of the current account deficit.
“The Kenya Shilling weakened against the dollar to touch a fresh three-and-a-half year low, hitting the 100 level against the dollar,” John Njenga from Commercial Bank of Africa Treasury said.
On the current account deficit, the country’s imports continues to grow while exports are sliding.
“At the moment our largest import is oil which causes high demand of the dollar. On the other hand our major export is tea and that has been going down. Kenya has now been overtaken by the Brazil and Ethiopian tea,” Njenga explained.
Since May this year, the regulator has maintained it has enough reserves to shield the currency against major turbulence. But the market continue to experience a shrinking local currency causing panic like it was in 2011.
The market now shifts focus to the Central Bank’s Monitory Policy Committee meeting on Tuesday for further guidance. Early this month economic experts had predicted that the CBK may be forced to raise the lending rate to curb high borrowing and stabilize the shilling.