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Shilling’s 129 peg at risk as Iran war volatility rattles market
A prolonged Middle East war would threaten the current liquidity in the dollar market that has protected the shilling from further erosion, as costlier imports increase the pace of dollar outflows.
Before the US and Israel went to war with Iran on February 28, the shilling had traded at Sh129.02 against the dollar for 19 straight days.
This remarkable run that saw the local unit sit at the Sh129 level to the dollar for more than a year was shaken by the war, pushing the rate to the 130 level by April 7, the highest in 20 months.
