Weeks after making consecutive gains against the Dollar, the Kenyan Shilling on Monday, April 15, weakened.
Commercial banks quoted the shilling at 131.00/132.00 against the Dollar, a drop compared to Friday, April 12 when it closed at 129.50/130.50.
The weakening of the local currency was mainly attributed to pressure on foreign currency demand from the fuel and manufacturing sectors.
The Shilling experienced pressure brought about by a high demand for the Dollar by the manufacturers who sought to purchase raw materials for their industries.
Due to a high demand for the Dollar by the manufacturers, more local currency was needed to buy the foreign currency to complete the trade.
Trade on the international front is normally carried out in dollars, and thus, traders seeking to complete their transactions must exchange their currencies for Dollars.
According to traders, there is a change in the way trade is currently being conducted on the international front, while previously it was done through offers, it is now done through bids.
The latest developments come barely weeks after the Shilling was ranked as the best-performing currency globally after it gained by 20 per cent.
The gain was attributed to several monetary policies implemented by the Kenyan government. Among them include; the partial buyback of the 2014 Eurobond.
Kenya was able to pay Ksh233 billion ($1.5 billion) out of the Ksh310 billion ($2 billion), leaving it with a deficit of $500 million which is supposed to be paid by June this year.
All this was done after the country issued a new Eurobond which went directly into paying the 2014 debt, as a result, there was investor confidence in Kenya's monetary policy hence stabilization of the Shilling.
A surge in tea export inflow by Kenya also contributed to the stability. The hike in diaspora remittances by Kenyans living abroad was also cited as another factor that contributed to the Shilling's recovery.
