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Import Prices Drop As Shilling Gains Value Per Dollar

Enterprise Team

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On Thursday the shilling gained ground on the dollar currency and hit a clean three-and-a-half year. This has allowed for cheaper imports of goods like cars, clothes, petrol and other machinery.

The shilling was exchanged at an average of Sh99.70 against the dollar. This is from Sh100.03 the previous day on increased hard currency inflows and a drop in demand for imports. The new rate was last experienced in July 2015

The Kenyan shilling has been working hard to breach the Sh100 mark for two months and through the hard work it has gained Sh2.50 to the dollar since the start of the year. With this, the pressure for importing commodities has been eased. Exporters of goods like flowers, tea and coffee will feel the pinch of reduced earnings once they convert their dollar sales to Kenya shilling.

A dealer from a commercial bank says, “Other than the usual dollar inflows from exports and remittances, we have also seen flows coming in from investors looking at the infrastructure bond currently on sale. “The demand side has been quiet as buyers adopt a waiting stance anticipating the exchange rate will go lower.”

The value for the shilling has improved over time within the last two months and it is expected to hold and do even better. Kenyans are already experiencing the positive impact on the cost of imported goods. The prices of fuel have gone down significantly within a very short time.

The stronger shilling lowers the real cost of importing the commodity for oil marketers who buy dollars in the local market to make their payments.

Others benefiting from the currency gain include vehicle importers, who contribute a significant share of dollar demand when buying vehicles from abroad. Manufacturers who depend on imported raw materials also benefit from lower input costs on their dollar payments to external suppliers.

 

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