Kenyan shilling comes under heavy pressure ahead of Presidential elections

Since last week, companies and individuals have been stockpiling dollars ahead of the October 26 fresh Presidential election.

Since last week, companies and individuals have been stockpiling dollars ahead of the October 26 fresh Presidential election, forcing the central bank to intervene by cushioning the shilling against the sale of dollars and avoid volatility in the local currency market as political temperatures hot up.

“There’s a preference among corporate and some retail clients to hold their cash in dollars and that’s putting the shilling under pressure,” said a trader at a local commercial bank.

Companies and investors usually hold their cash in dollars ahead of elections to cushion them against unexpected eventualities since the dollar is stable compared to the local currency.

The Central Bank of Kenya (CBK) sold dollars in the forex market early on Monday after the shilling came under increased pressure as companies increased their demand for dollars and foreign investors exited the stock exchange.

“We expect the trend to continue and depending on the CBK interventions and political development, the shilling could weaken further,” The trader said, adding that the persistent dollar sale was eroding the central bank’s foreign exchange reserves.

On Tuesday the dollar was selling at 103.7961 against the shilling and market analysis warn the dollar could rise even higher depending on how the Presidential election turns out.

Regionally, local currencies are stable; the rand is selling at 7.5727, Ghanian cedi is selling at 0.23 and Nigerian Naira sells at 0.003 against the dollar.

Kenya has been in a state of high political uncertainty since the August 8th presidential elections were nullified by the Supreme Court.

In a bid to calm down investors and market in general, CBK Governor Dr. Patrick Njoroge last week came out to assure investors that the country was stable and stronger despite the ongoing political crisis.

Should the shilling continue slipping down however, it could trigger inflation forcing ordinary Kenyans to spend more as the cost of living shoots up.

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

Recommended articles

4 side effects of being a virgin for too long, according to research

4 side effects of being a virgin for too long, according to research

KDF moves to forcibly acquire Sh 500M supermarket land in Nairobi

KDF moves to forcibly acquire Sh 500M supermarket land in Nairobi

Fred Obachi Machoka’s heartfelt message to his wife of 41 years [Photos]

Fred Obachi Machoka’s heartfelt message to his wife of 41 years [Photos]

Zari Hassan lectures Tanzanians over her viral black innerwear video

Zari Hassan lectures Tanzanians over her viral black innerwear video

Where is Mr Tembo? Ex-Tahidi High principal resurfaces [Video]

Where is Mr Tembo? Ex-Tahidi High principal resurfaces [Video]

Diana Marua hospitalized, Bahati gives update [Photos]

Diana Marua hospitalized, Bahati gives update [Photos]

Betty Kyallo shares photos of the first Subaru she bought after joining KTN

Betty Kyallo shares photos of the first Subaru she bought after joining KTN

North Korean man who smuggled 'Squid Game' into the country to be sentenced to death

North Korean man who smuggled 'Squid Game' into the country to be sentenced to death

Yvette Obura’s heartwarming message to Diana Marua excites Kenyans

Yvette Obura’s heartwarming message to Diana Marua excites Kenyans