NAIROBI, Kenya, Jul 18 – The Kenyan shilling has slipped against various major currencies, a development attributed to the ongoing youth-led demonstrations and the country’s downgraded rating by global rating agency Moody’s.
Treasury, in a commentary with with Capital FM disclosed that the local unit has continued to face a downturn, with forex figures showing a scaled-up exchange rate of the local unit against regional currencies.
“The local unit continued to lose ground against the greenback closing the session lower to its opening levels yesterday,” said Treasury.
As of Thursday, different forex bureaus quoted the local unit at Sh131 against Sh131.75 compared with Monday’s closing rate of Sh128.75, Sell Sh129.75.
The pound and euro, on the other hand, traded at 170.3/171.3 and 143.2/144.1 compared to Monday’s closings at 167.30/168.70 and 140.50/141.65.
On July 9, Moody’s cut Kenya’s sovereign credit ratings, citing “diminished capacity to maintain revenue-based fiscal consolidation that would improve debt affordability and place debt on a downward trend.” Moody’s said the downgrade places Kenya’s foreign-currency long-term issuer ratings and foreign-currency senior unsecured debt ratings to Caa1 from B3, with the country’s outlook remaining negative.
“In particular, the government’s decision not to pursue planned tax increases and instead rely on expenditure cuts to reduce fiscal deficit represents a significant policy shift with material implications in Kenya’s fiscal trajectory and financing needs,” it said in a statement.
This followed President William Ruto’s withdrawal of the 2024 finance bill in the wake of the Gen Z-led protests.
The government had sought to raise an additional 346.7 billion Kenyan shillings (about 2.7 billion U.S. dollars) to fund its 31-billion-dollar budget for the financial year 2024/2025.
Earlier, the Treasury had admitted that the negative ratings by the global credit rating agency hurt Kenya’s chances of attracting cheaper loans from the international market.
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