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Strong shilling hurting Kenya’s exports in region

RenCap global chief economist Charles Robertson (left) and sub-Saharan Africa economist Yvonne Mhango during the East Africa investor conference in Nairobi on October 3, 2016. PHOTO | DIANA NGILA

The Kenyan shilling is nearly 20 per cent overvalued against the dollar in real terms rendering the manufacturing sector uncompetitive in the regional export markets, economists at Renaissance Capital say.

The analysts estimate the fair value of the shilling based on the real effective exchange rate (Reer) should be 119 units to the dollar. Reer takes into account the currency’s value relative to that of its trading partners as well as inflation levels.

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Note: The results are not exact but very close to the actual.

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