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Category: Diaspora News

Written by Kim

The Kenyan Shilling has overtaken its Ugandan counterpart as the world's worst performing currency, according to data from Bloomberg, a US-based news agency.

The Kenyan unit yesterday sold for Ksh104.20 (Shs3,021) against the dollar compared to Shs2,845 quoted for the Uganda currency.

East Africa's money markets have been battered by rising inflation, the turbulence in the euro-zone and the price volatility in the global oil sector. Uganda's inflation standing at 21.4 per cent is the highest in the region compared to Kenya's 16.7 per cent, Tanzania's 16 per cent and Rwanda's 9.79 per cent.

East Africa has since the beginning of this year trodden a tough economic path worsened by an acute food shortage, a horrid drought escalating fuel prices and a volatile foreign exchange market.

The effect of fuel prices

Fuel, a key driver of commodity and service prices, has since the beginning of this year continued moving northwards with a litre of petrol going for Shs3,900 in Uganda, Shs 3,332.97 for |Kenya, Shs 3,875.4 for Tanzania

According to Bloomberg, the Kenya Shilling registered heavy depreciation against the green back falling from 15 per cent in June to 21 per cent in September.

In a move to correct the volatility in the currency market the country's central bank has restricted liquidity to commercial banks in order to curb currency speculation. The bank has also reversed several rate decisions this year, undermining monetary policy.

The turbulence in the money market has resulted into an increase of interbank interest rates from just 2 per cent nine months ago to 28 per cent.

However, Mr Uhuru Kenyatta, the Kenya Finance Minister is expected to invoke a law that enables him to impose a cabinet-determined monetary policy direction on the central bank to help stabilise the shilling.

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