Yesterday, the Kenyan shilling hit a record low and depreciated to Sh92.10 to the US dollar.
This is bad news to a country struggling to recover from the effects of drought, inflation and high commodity prices.
It means that the shilling has now shed more than Sh10 from previous level of Sh81 to the dollar in February, a decline of over 13 per cent in just six months.
The explanation seeping through is that the local currency was weighed down by demand for the US currency from oil importers.
The last time the local currency witnessed such unprecedented fall, we were told it was because some commercial banks were speculating with the dollar.
The common thread in all these arguments is that there will always be a reason to justify the shilling’s slide.
But nobody seems to care about the effect of a weak shilling on importers of raw materials and industrial goods that we require for our economy.
Commodity prices will shoot up the roof. The cost of fuel, which we heavily rely on to drive our economy will go up further and inflation will continue, thus causing more suffering to the already struggling economy.
Yet, every time this happens, the Central Bank of Kenya (CBK), which is the regulatory authority maintains that market forces should be left to determine the fate of the shilling.
Time to act
In the face of all the problems triggered by a weakening shilling and past precedence where market forces have not acted as fair arbiters of the trend of the shilling, we feel it is only fair to call upon CBK to act and reverse this trend.
Central Bank’s decision not to intervene in the foreign exchange market is ill-advised, especially when the shillings depreciation is becoming a threat to national security.
It is time for the bank to stop its crossed arms and legs approach to important national matters and act to stop the shilling from further downward slide.