Kenya: Kenyan shilling slumps to record low
Kenyan shilling slumps to record low
Kenya's shilling dropped to a record low of 101.69 to the dollar at the end of trading Monday, as east Africa's largest economy struggles with inflation and a growing balance of trade deficit.
Kenya's shilling has lost just over a quarter of its value against the dollar this year, with economists downgrading Kenya's 2011 economic growth rate.
Breaching the shilling's psychological mark of 100 to the dollar is a blow to businesses, analysts said.
"Due to the volatility of the shilling, it makes it hard for corporates to plan," said Evans Kama, from Genghis Capital Research and Investment.
"For those that depend on importing inputs, you expect that since their profit margins are being squeezed, it leads to a decrease in output and maybe lay-offs."
Year-to-year inflation reached 16.67 percent in August, according to the Central Bank of Kenya, although the bank has maintained it will not intervene despite the falling shilling.
"The current monetary policy stance will continue with consequential effects on inflation, interest rates and exchange rates," CBK governor Njuguna Ndung'u said Friday.
"The Central Bank remains committed to a market determined exchange rate for as long as it is supported by fundamentals," a statement signed by the governor read.
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