Strong rand puts pressure on World Cup travel budget

Kenyans planning to travel to South Africa for the Fifa World Cup final will have to revise their budgets upwards following the continued strengthening of the rand against the shilling — a situation that is making the country’s goods and services more expensive.

Market data show that the Kenya shilling has lost nearly 25 per cent of its value against the South African rand in the past year to stand at Sh10.3 for a Rand — the highest levels since January 24, 2008 at the height of the post-election turmoil.

Apart from making it harder for Kenyans to buy South African goods, the situation will force Cup tourists to adjust their budgets upwards to cater for the additional costs resulting from currency fluctuations.

The extravaganza is set for June and a number of local firms including insurance companies and travel agencies are marketing products for Kenyans keen on travelling to South Africa for the global sporting event.

The currency swings may pile pressure on the Cup’s visitors considering that already organisers have cautioned against inflating prices in anticipation of the roaring demand.

Other things remaining constant, such a gathering would be expected to increase demand thanks to the high number of visitors turning up for the popular event on the footballing calendar.

It will be the first time in the history of the event that Africa is hosting.

Analysts said the weakening of the shilling against the rand is linked to the appreciation of the South African unit against the dollar at a time when the Kenyan currency is losing value against the greenback.

“A lot of the rand strength has come from the appreciation of the dollar which has in turn affected other currencies,” said Mr Robert Aloo, a dealer at KCB.

Traders and analysts said that the rand demand is likely to rise as the World Cup tournament approaches and more recovery of the American and the global economy with greater impact on the currencies of countries that will participate at the soccer extravaganza.

Analysts say that more volatility may be seen as speculators target the rand exchange rates.

This has implications for many Kenyans who either intend to travel to South Africa or are trading with the rainbow nation.

It is more expensive to obtain the rand when travelling to SA just as it is expensive to import goods from there.

For exporters, however, they will reap high profits as they get more shillings for a rand.

Kenya’s imports from South Africa include rice, oat, maize, wheat, refined sugar, and edibles like soup, broths, ice cream, yeasts, and baking powder.