For eleven days now, the Kenyan shilling has been trading at its lowest. The local currency hit the most down on Monday, trading at 109.23 against the US dollar. On November 2nd, the shilling traded at 108.83, which is Kshs 6.81 low since early this year when the first COVID-19 case was reported.
From the financial analysts’ viewpoint, the high demand for foreign currency has led to a fall in the local currency price. The demand for foreign currency is attributed to the reduced number of foreign tourists in the country and decreasing exports of products to other countries.
The world is experiencing the second wave of COVID-19 infections, and in response, western governments have restored lockdown. This has reduced the number of visitors to Kenya and products being exported to those countries.
Notably, since the government eased the lockdown measures within the country, the importers have resumed their businesses. There is an increased demand for imports, and the import cost of the products has gone up. Some of the country’s imported products include petroleum products, motor vehicles, cooking oil, and wheat. This has led to high demand for foreign currencies, which has largely contributed to the local Currency’s persistent weakening.
If the trend continues, there is a possibility of an increase in the cost of living.