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Rank: Elder Joined: 11/27/2007 Posts: 3,604
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The kenya shilling is weakening every day. what is happening? African parents don't know how to say sorry.. the closest you will get to a sorry is a 'have you eaten'
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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Sober, ati the dollar is getting stronger each day due to Osama's death. They got him!  GOD BLESS YOUR LIFE
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Rank: Elder Joined: 11/27/2007 Posts: 3,604
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youcan'tstopusnow wrote:Sober, ati the dollar is getting stronger each day due to Osama's death. They got him! it is not the dollar the pound is trading at 140 and the euro at 122. something is seriously wrong here and we better address it early. African parents don't know how to say sorry.. the closest you will get to a sorry is a 'have you eaten'
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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youcan'tstopusnow wrote:Sober, ati the dollar is getting stronger each day due to Osama's death. They got him! =>It's the KES getting weaker and it's good for exports esp tea and flowers. The opposite of courage is not cowardice, it's conformity.
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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jerry wrote:
=>It's the KES getting weaker and it's good for exports esp tea and flowers.
I bet these tea and flower companies use heavy machinery which require fuel. With the Kenya shilling weakening, they will have to pay more. Electricity costs will also rise as more is generated through diesel GOD BLESS YOUR LIFE
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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youcan'tstopusnow wrote:jerry wrote:
=>It's the KES getting weaker and it's good for exports esp tea and flowers.
I bet these tea and flower companies use heavy machinery which require fuel. With the Kenya shilling weakening, they will have to pay more. Electricity costs will also rise as more is generated through diesel @ycsun, true though the net effect is likely to be positive for this sector. Remember that some factories generate their own electricity and use firewood for boiler fuel as opposed to furnace oil. Again VAT is refundable. P.S. TeaAuction is carried out in dollars which are converted into more KES in case of a weaker KES. The opposite of courage is not cowardice, it's conformity.
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Rank: Member Joined: 9/26/2006 Posts: 410 Location: CENTRAL PROVINCE
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jerry wrote:youcan'tstopusnow wrote:jerry wrote:
=>It's the KES getting weaker and it's good for exports esp tea and flowers.
I bet these tea and flower companies use heavy machinery which require fuel. With the Kenya shilling weakening, they will have to pay more. Electricity costs will also rise as more is generated through diesel @ycsun, true though the net effect is likely to be positive for this sector. Remember that some factories generate their own electricity and use firewood for boiler fuel as opposed to furnace oil. Again VAT is refundable. P.S. TeaAuction is carried out in dollars which are converted into more KES in case of a weaker KES. One year later, the Ksh is back to the Ksh 86 versus the dollar. Will its depreciation be as dramatic as last year especially with elections looming? Time will tell. Happy Hunting.
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Rank: Member Joined: 8/27/2010 Posts: 495 Location: Nairobi
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Is this movement being caused by the weakening of the KES or by the strengthening of the USD? Sent from my Black Nokia 3310
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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KES has been a weakling since last year. Were it not for CBK's intervention it would be trading far worse. A snapshot of KE's econ fundies today vs last year shows the situation is worsening. This is why the GDP estimates for 2012 have been cut. USDKES @86 in 2011 vs 86 in 2012 is such a con job. This thing will be pushed by the market back to 100. Euros will make money vs KES this year! $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Elder Joined: 2/23/2009 Posts: 1,626
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euro security is compromised by possible multiple government debt defaults making the dollar the preferable currency to use for trade. Thus the dollar appreciates in value. Though the dollar is also volatile due to its trade deficit and the outcome of the talks with Iran. The key pieces to watch out for are the politics of ecb and the state's of the major governments in europe. Plus china applying to be part of the SDR currencies with its recent application to the IMF might signify a move to fill the gap between the dollar and the euro as the preferred currency of trade. But as of now i expect profits to be made between the fluctuations of the dollar and the euro as the situation sorts itself out. Uncertainty is certain.Let go
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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We all know that the USD is merely a lesser evil to the EUR as the both represent fundamentally busted & overly indebted economies. Good pointer there ChessMaster. The world needs a back up from the EUR (which I expect to die the Zim Dollar way). Thereafter, the USD will be deflated by a rush into the RMB. Game shot*
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Rank: Veteran Joined: 3/26/2012 Posts: 985 Location: Dar es salaam,Tanzania
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@hisah, Market analyst think this is a short term trend and that most probably the MPC will slash the CBR. http://www.nation.co.ke/.../-/hydkefz/-/index.html
Kindly advise on impacts on the NSE.
“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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The KES represents 40-50% debt while the USD & EUR represent +90% debt. Common sense then dictates which of the 3 is a fundamentally better currency now & later.
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Rank: Elder Joined: 2/23/2009 Posts: 1,626
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Definately not the KES. Although our debt is lower compared to them, the euro and usd have strength through their liquidity and reserves making them safer better to use to international trade than the kenyan shilling. Uncertainty is certain.Let go
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Rank: Member Joined: 7/2/2009 Posts: 12
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@ Ash Ock I think the shilling is weakening because;
1. With EURO zone woes there is low demand for the EURO and no one wants to hold it, therefore investors prefer to hold USD which is highly on demand and therefore the dollar will strengthen against the shilling making the shilling weaker.
2. Increased fuel prices are also are a strain to the shilling
3. Interest rates trend is downwards. 91 day Tbill and 182 day Tbill have also come down to 9.8% and 10.9% respectively compared to highs of like 20%
If MPC increases the CBR rate the shilling is likely to strengthen if they hold it at 18% the shilling is likey to continue weakening and we might see new lows. More of a catch 22 situation. I don't see MPC slashing the CBR rate, it would be the wrongest move....
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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@Metasploit - Please try and do your own research instead of relying on the so called 'analysts'. These 'analysts' last year couldn't see the USDKES moving from 80 - 90 - 100 - and above yet it was so evident when inflation started rocketing with CBK fidgeting at their job.
By hiking CBR, the CBK tried to stem the KES weakening tide which worked for a while. I have asked this query before, if inflation is on a downward trend for 6 months, why is CBR still stuck in the sky at 18%? This year I have talked a number of buddies back in KE and it seems like 1000 for 2011 was better of than today in terms of spending power. So is the KNBS inflation rate a true picture of what is on the ground? How many luxurious items have you (and still continue) cut off your budget? As well as essentials intake have your reduced to balance your budget? Does that reflect a strong KES?
Treasury has got $600M so I expect the tbill to continue tumbling as GoK is funded for now and need not borrow from the market.
Now the big question what has moved USDKES from 82 to 86 and above (at the moment - 86.45)? Dollar demand? What is causing this abnormal dollar demand? Importers? Really? If it is a short term trend as the 'analysts' say, how short term is Jan to May to move USDKES from 82s to 86s?
KE has a worrying BoP scenario which needs to be fixed asap. But this will not be fixed by CBK moving in and out of the market using repos and selling dollars. No CB is larger than the market! Treasury needs to relook at the fiscal policies and sort out the mess. The longer they drag their feet, the more Mr Market will continue to punish the KES.
For now I only hope the EURKES will weaken below 100/- then my EURKES game will be on for 2013.
So as a foreigner, if tbill are tumbling and the KES is bleeding, why would I put my forex at the NSE?
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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ChessMaster wrote:Definately not the KES. Although our debt is lower compared to them, the euro and usd have strength through their liquidity and reserves making them safer better to use to international trade than the kenyan shilling. Very correct. All they have left is technical support of global utility value. Take that out (add RMB & Rupee) combined with their busted fundamentals & it's game over. Stay tuned.
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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The rubber has to meet the road for Western economies soon. I shall not be fooled. Lost decade baby.
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Zim taught me productive capacity is everything - no matter how much money you throw/print into the economy. I find no difference in the Fed, BoE & ECB actions.
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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The man with the gold makes the rules & that is just life.
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