Kenya’s Shilling Near Four-Year Low as Flower, Tea Exports Slip
Kenya’s shilling fell to the weakest level against the dollar in almost four years amid a decline in earnings from key exports including flowers and tea.
The currency of East Africa’s largest economy dropped 0.2% to 104.07 shillings per dollar by 12:40 p.m. in the capital, Nairobi, on track for the lowest level since October 2015. It’s set for a fifth straight monthly decline.
While remittances, Kenya’s biggest source of foreign exchange, rose in the six months through June, agricultural and cut-flower exports declined and tourism numbers dropped. That’s putting pressure on the shilling at a time when a strengthening dollar is undermining most emerging-market currencies.
“Exports have been muted while imports have been expanding and resulted in widening the trade gap,” said Churchill Ogutu, a senior research analyst at Nairobi-based Genghis Capital. “If three of the top four forex earners are having a downturn it will exacerbate the deficit.”
Kenya’s tea production in the first five months of this year fell to 170.18 million kilograms compared with 187.69 million kilograms during the same period in 2018. The average auction price was $2.25 per kilogram compared with $2.80 per kilogram a year ago. Kenya is the world’s biggest exporter of black tea. The Kenya Flower Council sees 2019 cut-flower earningsgrowth slowing to 20% from 38% on global oversupply. Kenya is the largest exporter of cut flowers to Europe.
The number of visitors to Kenya declined to 921,090 in the first six months of this year compared with 927, 977 during the same period a year ago. Cumulative remittances in six months through June increased to $1.45 billion from $1.38 billion during the same period last year.