The Kenyan shilling posted a slight decline against the U.S. dollar and other major global currencies in the week ending May 15, as the impact of rising global fuel prices continued to be felt in the local market.
Latest data released by the Central Bank of Kenya (CBK) shows the shilling traded at Ksh129.33 against the dollar on May 14, compared to Ksh129.19 recorded a week earlier.
While the change was minimal, it reflects the growing pressure on the local currency as global oil prices rise and the cost of imports increases.
Besides, the weekly CBK Bulletin further revealed that the value of the US Dollar appreciated significantly globally within the week after the adjustment of expectations of potential rate hikes in 2023 by the U.S. Federal Reserve.
In its exchange rate against the Euro, the shilling was valued at Ksh 151.24 and traded at Ksh 174.69 against the Sterling Pound in the same period.
This slight depreciation is taking place amidst Kenyan citizens having to face higher fuel prices due to the recently conducted price review by the Energy and Petroleum Regulatory Authority (EPRA).
International crude oil markets have continued being very unstable due to tensions between the U.S, Israel, and Iran within the Middle East area, causing the prices of crude oil to soar high in international markets.
Specifically, the prices of Murban crude oil soared to USD 94.84 per barrel on May 14 from USD 89.13 a week before, increasing pressure on fuel importing nations like Kenya.
As noted by CBK, inflation fears still loomed large in the global marketplaces especially in the United States with energy and service prices continuing to increase.
Amidst the pressures, Kenya’s foreign exchange reserves stood at USD 13.5 billion, enough to cover about 5.7 months of imports.
The reserves are still higher than the required minimum of four months as per CBK guidelines, providing some buffer for the economy.
On the other hand, diaspora remittances fell from USD 421.1 million in March to USD 397.8 million in April, indicating reduced receipts from major source countries.
Nevertheless, the total receipts from diaspora remittances over the past 12 months have shown a marginal rise, contributing positively towards the local currency during the present global economic instability.
The shilling was stable against the regional currencies, namely Ugandan, Tanzanian, Rwandese, and Burundian currencies.
