The official exchange rate of the Kenyan shilling against the U.S. dollar has officially surpassed the 150-unit mark.
Since the beginning of the year, the Kenyan shilling has depreciated by 17.7 percent against the U.S. dollar, which is more than double the 8.3 percent it lost against the dollar in the entire year of 2022.
The Central Bank of Kenya (CBK) published indicative rates on Monday morning, showing the dollar’s buy price at Sh149.84 and a selling rate of Sh150.04 units, resulting in an average of 149.94.
By the afternoon, the spot or average trading rate had risen to Sh150.03.
Treasury Cabinet Secretary Njuguna Ndung’u, during his appearance before the National Assembly on September 27, explained that the shilling’s recent slide is not a free fall but rather a “process of adjustment” due to historical policy mistakes in shilling management.
Prof. Ndung’u stated that Kenya had maintained its currency’s value largely constant in the previous five to seven years, even as the country’s price structure changed, leaving it misaligned with the real economy.
The Cabinet Secretary’s comments suggest that the consistent pace of depreciation against the dollar is a result of the CBK allowing the shilling to adjust to its correct level without intervention, except in cases of volatility.
“We are actually paying the price for misalignment that occurred in the previous five to seven years,” the Cabinet Secretary explained during his appearance before Parliament to address questions from MPs.
“As soon as we allowed the nominal exchange rate to move – because there was a requirement that it can’t fluctuate more than 20 cents either way – then we restarted the interbank market, there was [a] steep depreciation which was also being pushed by scarcity of dollars.”
