Retail buyers of dollars are now paying up to Sh143 in banking halls as the demand for the greenback surges.
This comes amid the revamping of the interbank foreign exchange market, which was seen as the panacea for easing access to foreign currencies.
Access to the greenback previously proved difficult due to banks’ unwillingness to sell to each other, making it hard for smaller players to fulfil their orders from clients.
The shilling has weakened against the dollar, piling further pressure on Kenyans as the cost of living surges.
Ballooning inflation, escalating borrowing costs and a strong dollar have made repaying sovereign loans and raising money significantly more expensive for Kenya amid fears of default.
According to Central Bank of Kenya (CBK) data, the shilling exchanged at an average of Sh137.4912 against the dollar yesterday.
But a subsequent spot check by Saturday Standard showed retail dollar buyers were paying up to Sh143 per unit in various city banking halls.
This underlines the margin between the US dollar’s printed rate by CBK and the market rate for customers quoted by banks and foreign exchange bureaus is widening again after being arrested by the recent interbank market reforms.
Lack of a vibrant interbank foreign exchange market had earlier partly been blamed for a biting shortage of hard currency.
This gave rise to a parallel market, with money-changers quoting a different foreign exchange rate to the official central bank one, at a divergence of about 10 per cent.
Several large banks are now selling the dollar at between Sh140 and Sh143 per unit, while buying the same at between Sh128 and Sh137, with bankers and forex bureaus saying the higher prices are driven by fresh demand and the cost of accessing the hard currency on their part.
Standard Chartered and Equity Bank quoted the greenback at Sh143 and Sh140 per unit respectively yesterday while buying the same at Sh138 and Sh128 respectively.
Family Bank and Stanbic Bank quoted the dollar at Sh141 and Sh140 per unit while buying the same at Sh137 and Sh132 respectively, according to a spot check at their branches.
Several forex bureaus within Nairobi quoted the dollar at upwards of Sh140 while buying at an average of Sh137.
The volatility in the forex market had previously slowed dollar trading among lenders, causing a scarcity of the US currency.
The scramble for the dollar means that buyers — both for trading and hedging — keep bidding higher.
Kenya has been banking on an oil import deal that government says will cut demand for dollars to ease the current shortage.
President William Ruto said recently he expected the local unit to strengthen to below 120 per dollar in the next couple of months, following a deal that will see Kenya buy oil on credit for six months from the United Arab Emirates.
Oil firms said earlier they spend an average of $24 million (Sh3.2 billion) daily to buy and stock fuel for various outlets across the country.
Kenya signed the oil import deal with companies in the UAE and Saudi Arabia in March, with the first consignment of fuel arriving in April and payments staggered after six months to ease demand for dollars in the market.
Fuel marketers had said they were experiencing difficulties in securing sufficient dollars to pay for fuel and gain access to their stocks at the Kenya Pipeline Company depots, leading to fuel shortages in some petrol stations across the country.