NAIROBI, Kenya, Mar 20 – The coronavirus pandemic has dragged the Kenyan shilling to yearly lows to sell at 106.60 against the US dollar, compared to 103.00 a week ago.
Analysts at NCBA bank say the drastic change follows a surge in demand for the safe-haven US dollar, which is considered much more stable globally, compared to the local unit.
The hit was so bad, that even the conventional currency flows from incoming tax payments could not salvage the shilling’s depreciation.
The fall of the shilling began on Thursday when it traded at 104.90 against 105.20, its lowest level since September 2015.
The local currency ceded further ground against the greenback in Friday’s early trading, with analysts attributing the fall to panic-dollar buying due to the pandemic.
“We expect trading to remain rather volatile ahead of the weekend, with the direction of the US-Kenya Shilling pair remaining at the mercy of broader market sentiments,” an NCBA analyst told Capital Business.
The shilling is not alone; a basket of other currencies around the world has felt the impact, including the British Pound which on Wednesday fell to its lowest level against the US dollar since 1985.
The BBC attributed the fall in the sterling pound to the spread of the pandemic, saying it spooked investors.
Other currencies that have taken a hit from the pandemic time and time against include those of China, Australia, New Zealand, Singapore and Taiwan.
The US dollar, however, seems to benefit from this pandemic with analysts noting steady strengthening.
On Thursday, the US dollar strengthened for the third day straight, with economists saying worries about the economic fallout from the coronavirus had been boosting dollar demand.
This is despite recent steps by world central banks aimed at alleviating market stress.