The shilling slumps to an unprecedented low level after the fuel price hike

The fuel hike has seen more demand for dollars with increased imports further eroding the Kenya shilling purchasing power

ByThe Weekly Vision Online

Although the Kenyan shilling remains East Africa’s strongest currency, it has in the recent past taken a sharp decline, slumping to an all-time low of Ksh. 116 to the US dollar.

This has been blamed on the virtual collapse of the tourism sector number foreign exchange earner and the recent increase in prices of fuel and other petroleum products. Economic experts who spoke to The Weekly Vision Online are warning of tough times ahead stressing that unless Nairobi tightens public expenditure by cutting down on wastage and rampant corruption, it could be headed to “financial ICU”.

According to Economic analysts who spoke to our writer, the economy faces a multiplicity of challenges that include government borrowing, exchange rate, inflation, interest rate, GDP, security, and investor confidence ahead of Kenya’s 2022 elections

The fuel hike has seen more demand for dollars with increased imports further eroding the Kenya shilling purchasing power. Since the first case of Covid-19 in March 2020 virtually closed down the economy, economic growth has been sluggish as the shilling continued on a free fall with occasional stability in the forex market. This pattern experts are warning is likely to escalate following low exports and increase in imports worsened by heavy external borrowing and rampant corruption.

According to Economic analysts who spoke to our writer, the economy faces a multiplicity of challenges that include government borrowing, exchange rate, inflation, interest rate, GDP, security, and investor confidence ahead of Kenya’s 2022 elections.

The adverse effect of the Coronavirus on the economy has led to the dipping of tax revenues yet government bloated public wage has kept expanding. The currency outlook was negative due to continued pressure on the shilling from the unfavourable balance of payments position, as we expected forex inflows to be impacted by the negative global economic outlook and the disruption of global supply chains.

Kenyans are now facing an increased cost of living after prices of all basic commodities went up after the state increased fuel prices for the 4th time this year.

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