The Kenyan shilling has been hard hit by the coronavirus (Covid-19) pandemic, now hitting a seven-month low.
As of today morning, one US Dollar was trading for Ksh104.55 from Ksh104.15 on Wednesday and Ksh103.72 on Tuesday.
The drop comes just hours after the government of Kenya confirmed three more cases of Covid-19 in the country, bringing the total to seven.
“Our view of a depreciated shilling still stands, given the uncertainty surrounding the spread of the coronavirus in the country, as well as spill over fears from the global scene,” said NCBA in a note to customers.
Read: Kenyans To Receive Free Alcohol-based Hand Sanitizers As Gov’t Seeks To Fight Coronavirus Spread
Currently, dollar trades, which entails mostly imports and exports and also diaspora remittances has gone down, in turn affecting downwards the strength of the shilling.
Remittances have become the largest contributor to forex reserves, which the Central Bank of Kenya (CBK) uses to stabilise the currency.
Recently, CBK announced plans to purchase Ksh40.5 billion worth of dollars from banks in the next four months to bolster its dollar reserves which stood at Ksh8.4 billion as at March 13.
The Covid-19 pandemic has affected many sectors, with the Nairobi Securities Exchange (NSE) main index dropping to a 16-year low last week.
Read: Coronavirus: Is the Kenyan Govt Hiding COVID-19 Related Deaths at the Port of Mombasa?
A recent Cytonn Investments report indicates that coronavirus has disrupted supply chain with the manufacturing sector suffering heavily as imports from China account for approximately 21 per cent of Kenya’s total imports.
“The low supply of imports from China as well as South Korea especially in terms of electronics could see process rise to exorbitant levels,” said the Cytonn report.
Despite China having its own currency, the US Dollar is the common tool of trade and most trades are done using the dollar.
Despite the weakening shilling, investor wealth at the NSE rose by Ksh3.7 billion on Wednesday to Ksh2.044 trillion, in tandem with the NSE All Share Index which was up by 0.24 points to 133.79 points.
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