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Foreign Exchange Market

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Foreign Exchange Market

The currency of Kenya is the Shilling, whose sign is KSH, /=, /- and code KES. The exchange rate is 1USD = 106.9629KES (Levina, 2018).

Stability of The Kenyan Shilling Against the U.S. Dollar.

In recent weeks, the Kenyan Shilling (KES) dropped by 4.4% against the U.S dollar due to the impact of the coronavirus (Levina, 2018). In March, 1 USD was equivalent to 106.0 Kenyan shilling, which is the lowest rate published since September 2015. The Kenyan shilling has notably weakened against the U.S dollar in the last decade as indicated by the table below.

Exchange rate Data-Kenya

2014

2015

2016

2017

218

2019

90.55

102.28

102.51

103.20

101.93

102.33

Fig. 1: Kenya’s exchange rate in the last six years

Kenyan citizens now have to spend more to purchase items. For example, in 2014, the cost of 1litre of milk was 28 Kenyan shilling; far, the same amount of milk goes for 99 Kenyan shillings (Gil-Alana, & Trani, 2018).

Reasons

In Kenya, there is a big gap between imports and exports. As of 2017, Kenya had an $11B negative net import trade balance. Imports started soaring in 2011 while exports stagnated.

Panelists see the Kenyan shilling losing value further to 108.81 KES per USD in 2021 (Gil-Alana, & Trani, 2018).

Countries that Trade with Kenya

Kenya trades with several countries of the world, for example, the USA, India, Japan, Ethiopia, South Sudan, Pakistan, Uganda, Somalia, United Kingdom, Tanzania, Netherlands, Saudi Arabia, the United Arab Emirates, and China trade with Kenya.

Risks Involved in Doing Business with Kenya

Even with bribery and corruption being illegal in Kenya, it is still widespread as a form of ‘getting things done. There exists a strong competition in the East, mostly in terms of price.

Kenya has experienced tension and violence related to the election that poses a threat (Gil-Alana, & Trani, 2018).

The projection for Expansion Over the Next 10 Years

Growth is expected to take place in the form of increased GDP, improved industrial activities, and a strong service sector. Its focus is on the “Big Four” agenda that prioritizes universal health, manufacturing, affordable housing, and food security.

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