Rédaction Africa Links 24 with Kenyans.co.ke
Published on 2024-03-16 15:58:09
Since President William Ruto assumed office, there has been a significant focus on the performance of the Kenyan shilling against the US dollar, especially with the rising cost of living. The period between September 2022 and January 2024 saw the shilling fluctuating between Ksh120 to Ksh160 against the dollar, painting a grim picture of the country’s economy due to the depreciation of the local currency.
However, there was a turning point when Ruto’s administration successfully executed a Eurobond buyback, leading to a notable gain in the shilling’s value in the following months. This turnaround brought some relief to Kenyans who were concerned about the weakening shilling and its impact on their daily lives.
During former President Uhuru Kenyatta’s tenure, the shilling traded at an average of Ksh110, but it rose to Ksh120 towards the end of his term. This set the stage for uncertainties in the financial market as Ruto took over the reins of leadership.
Experts predicted a continuous depreciation of the shilling against the dollar for 15 months after Ruto assumed office, citing the strengthening US currency globally. The IMF report highlighted the shilling’s overvaluation by 17.5%, adding to the economic challenges facing the country.
As the shilling plummeted to new lows, reaching Ksh156 by the end of December 2023 and crossing the Ksh160 mark by January 2024, investors in the foreign exchange market panicked. Some resorted to hoarding dollars as a protective measure against the weak shilling, leading to further instability in the market.
Amidst the concerns raised, CBK Governor Kamau Thugge addressed Parliament in January 2024, acknowledging the overvalued exchange rate and the impact on the country’s international reserves. However, he remained optimistic about the shilling’s prospects for a recovery in the near future.
The turning point came when the government decided to pay Ksh238 billion towards the Ksh310 billion Eurobond maturing in June 2024, resulting in a rally for the shilling against the US dollar. Critics questioned the high rate at which the government renegotiated the debt in the global market, raising concerns about the long-term implications of such a move.
As of March 14, 2024, the shilling has stabilized and is trading at Ksh137.49. President Ruto has expressed confidence in the country’s ability to avoid falling into debt distress, highlighting his administration’s efforts to ensure economic stability.
Overall, the journey of the Kenyan shilling under President Ruto’s leadership has been characterized by volatility, challenges, and eventual stability. The government’s strategic interventions and economic policies have played a crucial role in steering the currency towards a path of recovery and resilience in the face of global economic dynamics.
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