After 60 days of falls, the Kenyan shilling experienced its longest losing streak since records began in 1988.
By 10:55 a.m. in Nairobi, the shilling was down 0.1% against the dollar, bringing its year-to-date loss to more than 5%.
According to Genghis Capital, which forecasts the shilling to trade as low as 161.40 to the dollar by year’s end, worries about rising US interest rates, declining foreign-exchange reserves, and a deteriorating balance of payments have hurt the currency of East Africa’s largest economy.
That would mark the biggest annual depreciation since 2008, when the currency tumbled 23%, according to data compiled by Bloomberg.
Kenya’s foreign-exchange reserves dropped to $6.56 billion as of March 16, an 11-year low and sufficient to cover just 3.66 months of exports. The central bank’s statutory requirement is to maintain at least four months of coverage.
The central bank will probably raise its benchmark interest rate from 8.75% at its next Monetary Policy Committee meeting on March 29, Genghis said, after annual inflation quickened for the first time in four months to 9.2% in February.
Commercial lenders in Kenya are charging an average spread of 7.50 shillings on the official exchange rate, with some charging as much as 10.50 shillings, Genghis said.