NAIROBI, Kenya, July 19 – The Kenyan shilling has slipped against various global currencies, coming on the back of ongoing youth-led demonstrations and the country’s downgraded rating by global rating agency Moody’s.
As of yesterday, forex bureaus were buying one US dollar for about Sh131, up from Sh128.75 on Monday.
While one pound was equal to Sh170.3, the same unit was going for Sh167.3 on Monday.
NCBA Treasury Department told Capital Business yesterday that the local unit continues to face a downturn, with forex figures showing a scaled-up exchange rate of the local unit against regional currencies.
“The local unit continued to lose ground against the greenback closing the session lower to its opening levels yesterday,” said NCBA Treasury unit.
On July 9, Moody’s cut Kenya’s sovereign credit rating, citing ‘diminished capacity to maintain revenue-based fiscal consolidation that would improve debt affordability and place debt on a downward trend.’
Moody’s said the downgrade places Kenya’s foreign-currency long-term issuer ratings and foreign-currency senior unsecured debt ratings to Caa1 from B3, with the country’s outlook remaining negative.
“In particular, the government’s decision not to pursue planned tax increases and instead rely on expenditure cuts to reduce fiscal deficit represents a significant policy shift with material implications in Kenya’s fiscal trajectory and financing needs,” it said in a statement.
The pressure on the shilling also concides with deadly protests between the police and civilians even after President William Ruto withdrew the contentios Finance Bill 2024 that brought the all problem.
In the proposed Bill, the State had introduced a raft of new taxes such as on mobile money transactions, diapers, bread, among other products that would have seen the government collect Sh346 billion in additional taxes.
Earlier, the Treasury had admitted that the negative ratings by the global credit rating agency hurt Kenya’s chances of attracting cheaper loans from the international market.
