Login

Lost your password?

Sign Up

Register

Login

Login

Lost your password?

Register

Sunday, August 14, 2022
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion

Africa's
Investment
Gateway

The Exchange
  • Login
  • Register
Subscribe
This Month's Edition
Previous Editions
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
No Result
View All Result
The Exchange
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
No Result
View All Result
The Exchange
LOGIN
www.theexchange.africa

Kenya Shilling. Photo: File.

Kenya shilling depreciates further against USD as demand for dollars from oil, energy sectors rise

On a year-to-date basis, the shilling has depreciated by 4.8% against the dollar, higher than the 3.6% depreciation recorded in 2021

by Wanjiku Njugunah
July 25, 2022
in Business, Industry and Trade, Investing
0
Share on FacebookShare on LinkedIn
  • The Kenyan shilling depreciated by 0.3 per cent against the US dollar between July 18 and 22, 2022, to close the week at KSh 118.6, from KSh 118.3 recorded the previous week
  • Analysts from Cytonn Investments attributed the depreciation to increased dollar demand from the oil and energy sectors against a slower supply of hard currency
  • On a year-to-date basis, the shilling has depreciated by 4.8% against the dollar, higher than the 3.6% depreciation recorded in 2021

The Kenyan shilling depreciated by 0.3 per cent against the US dollar between July 18 and 22, 2022, to close the week at KSh 118.6, from KSh 118.3 recorded the previous week.

Analysts from Cytonn Investments attributed the decline to increased dollar demand from the oil and energy sectors against a slower supply of hard currency.

On a year-to-date basis, the shilling has depreciated by 4.8% against the dollar, higher than the 3.6% depreciation recorded in 2021.

The analysts said they expect the shilling to remain under pressure in 2022 because of several factors, including high global crude oil prices on the back of persistent supply chain bottlenecks, which the Russian-Ukrainian geopolitical pressures have further exacerbated.

The rise in prices comes when demand is picking up with the easing of COVID-19 restrictions and as economies continue to recover.

“Key to note, risks abound the recovery following the resurgence of COVID-19 infections in the country and the country’s trading partners.”

The shilling also declined because of increased demand from merchandise traders as they beef up their hard currency positions in anticipation of increased demand as economies gradually recover.

It also depreciated because of an ever-present current account deficit due to an imbalance between imports and exports. Kenya’s current account deficit is estimated to come in at 5.3% of GDP in the 12 months to May 2022 compared to the 5.0% for a similar period in 2021.

“The wider deficit reflects a higher import bill, particularly for petroleum products, with the imports for Q1’2022 increasing by 14.5%, 5.7% points higher than the 8.8% increase in export,” the analysts noted.

The decline was also a result of the aggressively growing government debt, with Kenya’s public debt has increased at a 10-year CAGR of 18.2 per cent to KSh 8.6 trillion in May 2022, from KSh 1.6 trillion in May 2012, thus putting pressure on forex reserves to service some of the public debt.

“The average GDP growth over the same period has been 3.9%, an indicator that the increase in debt is not translating into GDP growth.”

However, the shilling will remain supported by several factors, such as high Forex reserves, currently at USD 7.7 billion (equivalent to 4.5-months of import cover), which is above the statutory requirement of maintaining at least 4.0-months of import cover, and the EAC region’s convergence criteria of 4.5-months of import cover.

In addition, the reserves were boosted by the USD 750.0 million World Bank loan facility received in March 2022 and are expected to be boosted further by the USD 235.6 million funding from the International Monetary Fund (IMF).

The shilling will also receive support from the improving diaspora remittances evidenced by a 6.6 per cent year-on-year increase to USD 326.1 million as of June 2022, from USD 305.9 million recorded over the same period in 2021.

In the recently released June 2022 diaspora remittances figures, North America remained the largest source of remittances to Kenya, accounting for 59.1% in the period, followed by Europe at 18.2%, while the rest of the world accounted for 22.7% of the total.

Kenya Shilling depreciates by 0.7pc against USD in July

In a separate story, Equity Group grew the volume of diaspora remittances it processed by 39 per cent in 2021 compared to the corresponding period in 2020, leveraging on the growing popularity of digital channels for sending money home from abroad.

The lender handled Ksh383.5 billion in remittances from 12 months to December, up from Ksh279.4 billion in 2021.

The Group’s Chief Executive Officer and Managing Director, James Mwangi attributed this to linkage with multiple digital platforms, which have helped widen the geographical reach in the remittances segment.

Equity partners with over 10 money transfer platforms, including Western Union, PayPal, WorldRemit, MoneyGram and Hellopaisa, Equity Direct, and a new platform – Thunes – among others.

“Using fintech capabilities has given us a global presence, and as a result, we have become a major processor of remittances payments around the world including across currencies, reflecting on forex trading across the region,” said Mr Mwangi as he announced the full-year financial results.

As a result, the amount in commissions earned by the bank for handling remittances rose from Ksh1.5 billion in 2020 to Ksh1.6 billion in 2021, recording a 10 per cent rise as the forex inflows income rose by 33 per cent from Ksh6.2 billion to Ksh8.3 million.

Diaspora Kenyans stuffed Equity Bank accounts 9% more in 2021

Tags: Cytonn InvestmentsFeaturedKenyaKenyan shillingshilling

STATE OF ECONOMY - GET THE REPORT

ASSESSING EAST AFRICA

Loading...

Wanjiku Njugunah

Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

Related Posts

Zimbabwe’s central bank unveiled the first images of gold coins it hopes will help solve its inflation problem. www.theexchange.africa
Investing

Reserve bank of Zimbabwe to release smaller gold coins in November

August 14, 2022
The Kenyan stock market resumed Wednesday following the General Election break with a $268 million gain. www.theexchange.africa
Business

Kenya’s stock market is up $268 million amid a close presidential contest

August 13, 2022
Kakuzi, a listed Kenyan agri-business, has partnered with marketing firm Driscoll's to launch a blueberry export plan
Business

Kenya: Kakuzi signs new blueberry export plan with Driscoll’s

August 13, 2022
Next Post
www.theexchange.africa

7 Things Kenya should do to address high levels of debt

Mosi-oa-Tunya gold coins are expected to help defeat the black market (Photo/ The Herald)

How international buyers can export Zimbabwe’s gold coins

ExxonMobil, Shell, EACOP

Oil and Gas in Africa: Tanzania takes lead as it hosts energy congress

Please login to join discussion




This months edition

Features

The leaders of the BRICS nations meet at the group’s summit in Osaka in June 2019. Concerns are India might pull out of the group over tensions with China. (Photo/ Reuters)
Countries

What does Russia’s invasion of Ukraine mean for Southern Africa?

by Albert Nangara
August 3, 2022
0

When the United Nations General Assembly voted overwhelmingly on March 2 to condemn Russia’s invasion of Ukraine, African countries accounted...

Read more
Logistics and transport startups will play a major role in enabling Africa’s largest free-trade area (Photo/ Quartz Africa)
Industry and Trade

Trends shaping the future of logistics in African markets

by Albert Nangara
August 3, 2022
0

Digitization of logistics and compliance with sustainability policies will shape the future of logistics in African markets. Digitalization involves the...

Read more
Biometric systems are expected to lead the market for airport security systems in growth over the next five years, as the market increases at an 8 per cent CAGR through 2024 (Photo/ Biometric Updates).
Tech & Business

Machine learning, Artificial Intelligence changing Africa’s Airports

by Albert Nangara
August 2, 2022
0

According to Frontiers, AI has been recognized to have a wide potential to reduce human workload or increase human capabilities...

Read more
www.theexchange.africa/
Investing

ESG global mining and the social license

by Laurence Sithole
August 2, 2022
0

In terms of achieving net zero carbon emissions, the largest mining companies in the world have several options – each...

Read more
Some of the group members learning the components of the new briquette making machine. The machine can produce 500 briquettes per day. www.theexchange.africa
Investing

Reusable, organic charcoal: Answer to Africa’s cooking fuel challenges

by Njenga Hakeenah
August 2, 2022
0

United for Green is working to ensure that Africans do not get to these extremes. By empowering women, the plan...

Read more

News

Banking
Industry & Trade
Investing
Money Deals
Regional Markets
Tech & Biz
Opinion

Countries

Kenya
Tanzania
Uganda
Burundi
Rwanda
Southern Africa
Ethiopia

More

My Account
Contact us
Advertise
About us
Help Center

Subscribers Center

E-paper
Premium Stories
Education Rates
Corporate Subscriptions
Weekely Newsletter

  • My account
  • About us
  • Advertise
  • Contact
  • Privacy Policy
  • Refund Policy – The Exchange
  • Sitemap

No Result
View All Result
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
  • Login
  • Sign Up
  • Cart

© 2021 The Exchange - Powered by MediapixManaged by Supported by Digihandler,

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In