Browsing: EAC countries

East Africans should brace themselves for an increase in the cost of living as households and businesses pay more for goods and services.

Regional currencies are facing increased pressure against the dollar as increasing debt levels and increased servicing obligations threaten to wear down foreign exchange reserves, market data shows.

The projected drop of regional currencies is mainly attributed to the growing debt servicing obligations for foreign currency-denominated debts. To pay off external creditors, it requires a drawdown of the country’s foreign reserves.

According to analysts at AIB Capital, as a pick-up in consumer demand increases imports, the Kenya shilling is expected to further depreciate against the dollar. The country’s exports are likely to remain relatively uncompetitive therefore, this will lead to an increase in the current account deficit.

“We expect the shilling to gradually depreciate against the dollar but remain relatively unchanged against the euro and pound,” said AIB.…