By Spy Uganda
Kenyan business people along the Kenya-Uganda border have been dealt a blow as their shilling continues to weaken against the Ugandan currency.
The Kenyan shilling on Friday was averagely buying at Sh25.8 against the Ugandan shilling – the lowest ever recorded at the border. It sold at Sh26.5.
The weakening shilling, traders said, worked to the advantage of Ugandan importers who buy merchandise in Kenya before ferrying across the border.
Kenyans buying from Uganda said they were at a disadvantage as they now spend more to buy previously cheaper goods from the landlocked East African country.
Retailers who formerly imported eggs from Uganda reported they had stopped the business on a weak shilling which they said had negatively impacted on profitability.
Some shops no longer sell eggs as a result. Those still in the business receive supplies from as far as Nakuru and Naivasha.
The borders of Busia and Malaba support international business conducted between Kenya and her neighbours – Uganda, Rwanda, Burundi, DR Congo and South Sudan as well as informal individual small-scale traders.
Kenyan business people said the government should institute policies that will strengthen the shilling to cut the cost of imports.
The shilling fell to its current Sh25.8 mark, buying, after retailing at between Sh26.2 and Sh26.8 buying since January as it sold at over and above the Sh27 mark.
The traders complained less than 48 hours after the Central Bank reported that Kenyan households were staring at an even higher cost of living in the month of July as the shilling continued on a free fall against the dollar, hitting imports and local companies’ operations.
The local currency on Wednesday weakened further to a low of Sh141. 216 to a unit of the dollar, CBK data showed.
Year-to-date, the shilling has shed more than 13 per cent of its value from the Sh124.49 it averaged against the dollar in January.
It crossed the 140-mark last month with analysts predicting it could hit Sh145 by the end of August, mainly on high federal reserve rates, with benchmark interest rate seen to go up later this month to a 5.25 per cent-5.5 per cent.
The US Central Bank has been using rate hikes as measures to tame high inflation.
The Kenyan shilling has been on a back foot since mid-2018 when it stood at 101.29, even as CBK maintains the local currency remains stable.
With Kenya a net importer, a weak shilling means local traders and manufacturers are spending more to secure dollars to make payments in international trade, costs that are traditionally passed to consumers.
