• GTThe official exchange rate of the Kenya shilling has depreciated to 151 to the US dollar
• Kenya has repay the $2 billion Eurobond in June 2024
Central Bank Governor Kamau Thugge has admitted that the Kenya shilling has been over-valued as it has slipped to Sh151 to the US dollar.
The previous government invested a lot in maintaining a strong shilling. It was a point of pride for Kenya to have strong currency but it did make foreign debt payments more affordable.
Nevertheless the IMF repeatedly said that the shilling was over-valued and they were right. The $2 billion Eurobond has to be repaid in June 2024 and the need to save up is causing the present depreciation and rise in taxes.
It would be easy to blame the previous government for the slide in the value of the shilling but in reality the whole country welcomed the spending spree. We all share responsibility.
There are of course some good things about depreciation – it favours exporters so the country will be eventually earn more foreign currency which will stabilise the exchange rate.
So there is no need to panic over the declining value of the shilling, even though it is increasing the cost of living. Kenya is just going through a necessary period of adjustment.
Quote of the day: “Believe you can and you are halfway there”.
The 26th President of the United States was born on October 27, 1858