Kenya’s Shilling Posts Fifth Weekly Loss on Virus Fallout Fears

(Bloomberg) -- Kenya’s shilling extended its longest stretch of weekly losses this year and is seen on the back foot as concerns about the impact of the coronavirus pandemic on economic activity pile pressure on the currency.

The currency of East Africa’s largest economy depreciated as much as 0.2% to 109.37 against the dollar, the lowest level in four months. The shilling was trading 0.1% lower at 109.22 by 10:30 a.m. in the capital, Nairobi, marking its eighth straight day and fifth consecutive week of losses, according to data compiled by Bloomberg.

“Rising Covid-19 cases in the country have heightened fears of more restrictions on economic activity, which could pile further pressure on the shilling,” said Terry Karanja, a treasury associate at AZA Finance, a non-bank currency broker.

Key Insights

• “With increased dollar demand from importers set to continue, and prospects of a fourth Covid wave on the horizon, we expect the pressure on the shilling will persist over the coming week or so,” Karanja said.
• The losing streak extends the decline this month to 0.6% and a close at the current level would indicate that the shilling is oversold, according to the 14-day relative strength index.
• Kenya had 217,276 confirmed Covid-19 cases and 4,273 deaths as of Aug. 12, according to the Health Ministry. About 1.92 million people have been inoculated so far, and 2.7% of the adult population have received their second doses.

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