The Central Bank of Kenya (CBK) has announced a new exchange rate of Ksh158.66 for the US Dollar to Kenyan Shilling, anticipating the upcoming fuel review by the Energy and Petroleum Regulatory Authority (EPRA). This rate diverges from those set by commercial banks, which range from Ksh156 to Ksh158, signaling the shilling’s strengthening trend against the dollar.
Last week, CBK revealed its expectation for the shilling’s continued stability in February and March, crediting the positive trajectory to favorable diaspora remittances and a thriving tourism sector. The shilling’s recent historic high, marking a 1.8% gain against the dollar in just five days, follows a 21% fall recorded in December 2023, providing traders with a significant boost as import prices saw a corresponding decline.
In a bid to fortify the shilling, CBK raised the base lending rate from 12.50% to 13%, a move aimed at attracting foreign investors seeking better returns and ensuring stability in the local currency.
Concerns arise regarding EPRA’s fuel review process, as it employs the previous month’s dollar-shilling exchange rate. Energy CS Davis Chirchir questioned the discrepancies in ratings between EPRA and CBK, asserting that the Ministry would rely on CBK’s ratings going forward. Chirchir emphasized that any false ratings by EPRA would lead to consumer refunds for extra money spent on fuel. However, no progress has been reported on the CS’s recommendations.
CBK reports that the average exchange rate for the dollar against the shilling in January was Ksh160. The uncertainty remains regarding whether EPRA will align its rating with CBK’s for the upcoming fuel prices on February 14.
Notably, petrol, diesel, and kerosene prices between January 14 and February 13, 2024, stood at Ksh207.36, Ksh196.47, and Ksh194.23, respectively. EPRA has recently reduced prices by Ksh5 for petrol and diesel and Ksh4.82 per liter for kerosene, following a drop in international oil market prices, raising expectations of lower fuel costs for consumers.
