Kenyan Shilling Slips Against Global Currencies Amid Ongoing Protests and Downgraded Credit Rating

The Kenyan shilling has taken a hit against various global currencies, with the local unit continuing to face a downturn. The decline comes on the back of ongoing youth-led demonstrations and the country’s downgraded rating by global rating agency Moody’s.

As of yesterday, forex bureaus were buying one US dollar for around Sh131, up from Sh128.75 on Monday. Meanwhile, one pound was equal to Sh170.3, a slight increase from Sh167.3 on Monday.

The NCBA Treasury Department has confirmed that the local unit continues to lose ground against the greenback, closing the session lower than its opening levels yesterday. The department attributed the decline to forex figures showing a scaled-up exchange rate of the local unit against regional currencies.

The downgrade by Moody’s, which occurred on July 9, cited Kenya’s diminished capacity to maintain revenue-based fiscal consolidation, which would improve debt affordability and place debt on a downward trend. The agency downgraded 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.

The pressure on the shilling also coincides with deadly protests between the police and civilians, even after President William Ruto withdrew the contentious Finance Bill 2024. The proposed bill aimed to introduce a raft of new taxes, including those on mobile money transactions, diapers, and bread, which would have generated Sh346 billion in additional taxes for the government.

The Treasury had earlier admitted that the negative ratings by Moody’s would hurt Kenya’s chances of attracting cheaper loans from the international market. The situation highlights the challenges facing the Kenyan economy, which is grappling with fiscal pressures and debt sustainability concerns.