Shilling hits new low against dollar, falls to 110.05

It closed the market at 109.96 on Friday.

In Summary

•This is likely to see a hike in commodity prices as importers pass the bill to consumers.

•Kenya is largely an import economy. Those exporting, however, are likely to earn extra as they are paid in greenback.

The new notes.
The new notes.

The shilling dropped to a record low of 110.05 Monday as demand for the greenback by importers heightened.

The local currency which has been on the downwards trend since the country reported first coronavirus case in March closed at 109.96 Friday.

The continued depreciation of the shilling is likely to hit households hard, with importers slapping the increased import bill on consumers.

It is also likely to increase the country's debt obligation, considering that 65 per cent of external debt is denominated in US dollars.

However, exporters are likely to earn more on the weakening shilling.

The value of the shilling has in the past three months weakened against major currencies as people opt to store wealth in stable papers to cushion against Covid-19 economic turmoil.

In Kenya for instance, rich individuals seeking a safe haven for their wealth, stockpiled a record Sh45.5 billion in dollars in the three months to May upon the country reporting first Covid-19 case.

Data by Central Bank of Kenya (CBK) shows that foreign currency bank deposits held by Kenyans rose to Sh671.4 billion, up from Sh625.9 billion in February, one of the largest three-month jumps.

In the week ended November 13 however, the shilling remained relatively stable against major international and regional currencies.

More to follow