Kenya: Kenyan shilling depreciates to nearly-four-year low
September 14, 2015
In September, the Kenyan shilling (KES) weakened significantly against the U.S. dollar, continuing the general downward trend that has been in place since the beginning of last year. On 7 September, the currency traded at 106.2 KES per USD, falling past the 106 KES per USD mark that had last been breached in October 2011. The result was 4.8% weaker than on the same day of the previous month and 19.7% weaker on an annual basis. The currency has lost 17.2% of its value since the beginning of the year.
The depreciation of the shilling reflects continued weakness in the country’s important tourism sector, a main source of foreign exchange, over security concerns. Weakness in the agricultural sector of the world’s largest tea exporter adds to pressures on the currency. In addition, demand for emerging-market assets slowed due to recent volatility in emerging markets and expectations of a U.S. interest rate hike. The Kenyan Central Bank occasionally intervenes in the foreign exchange market and sells dollars to support the shilling; and, after its latest intervention in September, the currency appreciated slightly to 105.5 KES per USD on 14 September.