The Kenyan shilling fell to its lowest level in almost four months against the US dollar last week as demand for foreign currency increased.
The Central Bank of Kenya (CBK) quoted the dollar at 129.6754 shillings on Friday, down 0.1% from 129.5794 a week ago, as demand for the dollar retreated from the domestic market. The 4,444 shilling has lost 0.4% since President Trump was re-elected on November 6 amid a global recovery.
The US Dollar Index (DXY), which tracks the dollar’s strength against a basket of currencies, ended last week at 105.7 before reversing to a two-week low.
“Demand is still surpassing supply. That’s partly attributed to the end-of-month demand that we normally see,” a trader at a commercial bank said.
Meanwhile, Kenya’s foreign exchange reserves have been growing steadily and ended last week at $9 billion, enough to cover 4.6 months of imports. Current reserves are below the four-month legal requirement and above the EAC’s 4.5-month import guarantee requirement.
The US rose against major currencies on news of Trump’s victory in the US elections, following a pattern in the days following his victory in 2016.
The Trump administration could seek greater trade and stricter immigration requirements, which could curb inflation that is already slowing the Fed’s target and undermine the Fed’s efforts to lower interest rates. Higher tariffs would increase U.S. demand for foreign goods and services, reducing the trade deficit and thus increasing inflation.
