A currency dealer counts Kenya shillings at a money exchange counter in Nairobi. The Kenya shilling touched new lows of Sh92.35 against the US dollar in what has been termed as a build-up of demand. PHOTO/ FILE
By JOSEPH BONYO
Saturday, August 06, 2011
The Kenya shilling touched new lows of Sh92.35 against the US dollar in what has been termed as a build-up of demand.
The shilling opened trading at Sh91.80 against the dollar before easing to Sh92.15 leading to jitters in the market over further fall.
“It’s been weakening due to sustained demand mainly from the energy sector,” noted Mr John Muli a dealer at ABC Bank.
The energy demand is a monthly cycle as it happens every time an oil importation tender is announced.
The petroleum industry bids to import fuel on behalf of all other firms and only one company wins the tender.
The new lows for the shilling come at a time when traditional dollar inflows, mainly from tourism and agriculture are in the off-peak season. Kenya is one of the top destinations for tourists guaranteeing it substantial dollar income.
In agriculture, tea and coffee are also big foreign exchange earners.
“The traditional sources are not at the peak so the supply is thin,” another dealer said.
The pressure on the shilling was due to relief food imports by aid agencies and the government leading to increased demand for the dollar.
Neighbouring Somalia is facing famine, while the northern part of Kenya is also affected by drought.
Aid agencies in the country are importing food and medicines on huge budgets.
Regional currencies have been taking a hit especially on accounts of imports. Most countries especially Kenya are net importers, therefore the demand of the dollar pulls down the home currencies