The Kenyan shilling traded at Ksh129.72 against the US dollar on Thursday, down from Ksh129.30 on March 12, as the US-Israel war against Iran persists. Investors are rushing to the dollar as a safe haven amid surging oil prices. Experts warn of risks from imported inflation and rising living costs.
The US-Israel war against Iran, which began on February 28, has driven investors to the US dollar, pushing it to multi-month highs as a safe haven amid rising oil prices. Central Bank of Kenya data shows the shilling at Ksh129.72 on Thursday, down from Ksh129.30 on March 12, after trading below Ksh130 for nearly 20 months.
Experts predict it could reach Ksh160 by year-end, with the Institute of Economic Affairs warning of a drop to between Ksh139.64 and Ksh168.09 if Middle East tensions escalate. Carol Kong, a currency strategist at the Commonwealth Bank of Australia, told Reuters, "It doesn't look like the conflict will end anytime soon," adding, "The dollar is king while this conflict lasts."
Impacts include higher fuel, electricity, and staple prices, as Kenya is a net importer. Traders estimate weekly losses of Ksh1.2 billion from disrupted exports of meat and avocados to the Middle East. The Strait of Hormuz closure has caused fuel shortages, with one major distributor reporting empty stocks at some stations on Thursday.
Oil marketers demand a review of March 21 pump prices. President William Ruto urged a diplomatic resolution, while US President Donald Trump extended a pause on strikes against Iranian energy facilities into April. The Central Bank's Monetary Policy Committee meets on April 9.