(Nairobi) – The Kenyan shilling has experienced a slight depreciation due to increased demand for US dollars from manufacturers and oil retail companies.
On Thursday, the Kenyan shilling traded at 129.65/129.85 against the US dollar at 07:48 GMT, compared to Wednesday’s closing rate of 129.00/130.00. Traders attribute this decline to heightened demand for foreign exchange (FX) to meet the needs of businesses, particularly in manufacturing and the oil retail sector.
A trader from a commercial bank stated that the demand for dollars is currently surpassing the supply, contributing to the ongoing weakening of the local currency. The trader also noted that part of the increased demand can be attributed to the typical end-of-month surge in foreign exchange requirements, which is common in many markets.
Manufacturers in Kenya rely on foreign currency to import raw materials and machinery, while oil companies need US dollars to pay for petroleum imports. This combination of factors has led to a higher demand for foreign exchange, putting pressure on the Kenyan shilling.
The recent trend in the exchange rate reflects the broader economic challenges facing Kenya, including rising import costs and inflationary pressures. As global commodity prices fluctuate and the cost of fuel continues to rise, the demand for dollars remains strong.
The Central Bank of Kenya (CBK) has been closely monitoring the situation, but the ongoing pressure from increased demand for foreign currency has made it difficult for the shilling to stabilize in the short term.