Kenya - Money

SAP-induced reforms in the first quarter of 1994 instituted a free- floating exchange rate policy in Kenya, with the value of the Kenyan shilling thereafter being determined by its supply and demand in international money markets. Prior to the reform, the Kenyan government followed a fixed exchange regime in which the shilling was pegged to the U.S. dollar at a specific rate, subject to alterations only to rectify substantial distortions. Since the introduction of the free-floating exchange regime, the shilling has generally depreciated in relation to the U.S. dollar, meaning it takes increasingly greater quantities of shillings to equal the value of 1 U.S. dollar. In 1995, the exchange rate was averaged at KSh51.430 per US$1, with the rate depreciating to an average of KSh70.326 per US$1 in 1999, and an average of KSh76.93 per US$1 in 2000. The EIU expects that the rate will average at KSh80 per US$1 in 2001, and KSh84 per US$1 in 2002. While

Exchange rates: Kenya
Kenyan shillings (KSh) per US$1
Dec 2000 78.733
2000 76.176
1999 70.326
1998 60.367
1997 58.732
1996 57.115
SOURCE: CIA World Factbook 2001 [ONLINE].

currency depreciation is positive for the exporting sectors of the Kenyan economy, since less foreign money is needed to buy Kenyan exports which thereby renders them more attractive, it has the adverse effect of increasing the prices of imports. For a drought-effected food-importing nation like Kenya, increases in the prices of essential imports can have negative consequences on the poorest segments of the society.

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Aug 12, 2011 @ 3:03 am
It is increasingly worrying how the Kenyan currency has continued to depreciate against major world currencies over the years.One wonders what the future holds for the cost of living for this developing country as the inflation continues to spiral out of control, making the livelihoods of the Kenyan people to shrink as the days go by.

Is this just a normal phenomenon on our economic cycle or is there no hope for the Shilling???
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Oct 19, 2011 @ 4:04 am
it is very much discouraging when one wakes up every single day and finds the food prices of basic commodities going up we are suffering so much especially those living in the country side where they are being exploited by middle men who take advantage of this inflation to increase prices beyond any reasonable level e.g in west pokot

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