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According to reports, commercial banks are at the forefront of this evolving narrative. Some have already breached the Ksh 150 threshold in Nairobi, intensifying the strain on the Kenyan shilling

Kenyan shilling inches closer to 150 against the dollar, sending ripples through business circles | Pulselive Kenya

Victor Oluwole

Kenya's economic landscape is undergoing a seismic shift as the shilling experiences an unprecedented decline of nearly 50% against the dollar in just under 50 months.&nbsp;

This profound depreciation places immense pressure on consumers, who are grappling with the mounting costs of imported goods.

According to reports, commercial banks are at the forefront of this evolving narrative. Some have already breached the Ksh 150 threshold in Nairobi, intensifying the strain on the Kenyan shilling and setting the stage for potential price hikes across various imported items, ranging from electronics to vehicles.

A recent investigation by <a href="https://www.businessdailyafrica.com/bd/markets/capital-markets/kenyans-feel-the-sting-of-shilling-at-150-against-dollar--4329532">Business Daily</a> underscored the gravity of the situation. The exchange rate against the dollar is progressively edging toward the ominous Ksh 150 mark across 11 banks and three forex bureaus.&nbsp;

This disparity, however, contrasts sharply with the Central Bank of Kenya's official stance of an average exchange rate of Ksh 142.98.&nbsp;

READ: <a href="https://africa.businessinsider.com/local/markets/top-10-african-countries-with-the-strongest-currency-exchange-rates-in-2023/v5b42pe">Top 10 African countries with the strongest currency exchange rates in 2023</a>

This glaring discrepancy highlights the fissure between official figures and the practical trading realities cited by forex dealers.

At the heart of this issue lies the country's ongoing struggle with a shortage of foreign currency.&nbsp;

As the Kenyan shilling continues its slide, despite government interventions, other banks have noted dollar exchange rates fluctuating between Ksh 146.7 and Ksh 149.1.

Moreover, the effects are palpable on a microeconomic level. Importers are reeling from the impact, finding themselves constrained to reduce their purchases.&nbsp;

The consequences are trickling down to consumers, who now bear the brunt of escalated prices for imported goods.

In the automotive sector, the stark contrast is vivid. The cost of importing a luxury V8 car, which stood at Ksh 7.35 million just a year ago at an exchange rate of Ksh 105, has surged to Ksh 10.29 million with the current rate of Ksh 147.&nbsp;

This equates to an additional expense of Ksh 29.4 million for those importing a fleet of these vehicles.

With the impending debut of Eurobond repayment in June, projections indicate that the shilling's plight may deepen further, reaching 150.76 units against the dollar.&nbsp;

This potential scenario signals enduring pressure on Kenya's exchange rate and casts a shadow over the nation's fiscal resilience.

While President William Ruto's optimism about a stronger shilling following the government's oil import initiative was notable, the reality has proved more challenging.&nbsp;

The shilling's relentless depreciation is a complex interplay of global economic dynamics, including interest rate adjustments by central banks in advanced economies.

Kenyan shilling inches closer to 150 against the dollar, sending ripples through business circles

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