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Thursday, January 08, 2009

Where hither the Kenya Shilling?

What do you guys/gals think where the Kenya Shilling will head versus the basket of forex currencies (USD, Yen, GBP, Euro)....

I don't understand the reason (except the 'safe haven' argument) for the strength of the US$... The US gov't (thru the Fed & Treasury & other agencies) will pump (since Aug 2008) in $1,000,000,000,000 (almost 6% of the USA's GDP) into the system by June 2009....

Whereas I do not expect inflation to be a problem since the 'extra' cash will be negated in part by:
  • lower interest rates on loans
  • lower housing costs
  • lower fuel/energy costs
  • reduced salaries (loss of jobs or no more increases)
  • discounting of merchandise/food
I still wonder if the US$ can sustain it's strength vs other currencies... of course, these guys (UK, Europe, Japan) are not much better off either!

China is a wild card... or the joker?

Please provide your thoughts... and guidance... and ideas...

11 comments:

MainaT said...

Euro will fare better than the other two.
Arbitrage

coldtusker said...

Which 'other two' currencies are you talking of? I am interested in the KES...

MainaT said...

CT-your question was how Ksh will perform vs $/£ and Euro. Ksh will weaken more vs Euro compared to the other two, because ECB won't cut rates or print money as quickly as the other two.
Comprende?

ke said...

The U.S. dollar is headed for collapse. Bernanke is printing money like Mugabe.

The Euro will become the world's new currency.

Who cares about the KES? It won't do well against either of these currencies (less so for the devalued dollar).

kenyanentrepreneur.com

Ndungu is soon going to have to print money to pay these greedy MP's. He has no other choice.

Where else is he going to get the money from? The NSE is bearish and the global capital markets are reeling.

If your in Kenya you need to worry about runaway inflation, a looming food crisis and increased poverty, all of which will lead to civil unrest and higher crime rates.

MainaT said...

KE-don't know why you bother commenting about Kenyan issues. Si you can just comment about your lovely US.
For Kenyans abroad or home, the Ksh value now and later is of concern and something we all factor into our financial planning.

Ssembonge said...

USD is expected weaken against the Euro but KES is in trouble because of

- PEV
- Inflation/food shortage
- Reduced remmittance
- Drought (hello water/electricity rationing)


2009 will be a tougher year for Kenya

ke said...

Maina:

This is not your blog. It's coldtuskers blog. He asked a question and i was responding to him, not to you.

MainaT said...

ke- so?

BS is BS...

ke said...

maina:

It's amazing how you've appointed yourself the arbiter of what's important and what's BS (on blogs that don't even belong to you)!

Fortunately for me, I don't seek your acceptance for the things I write.

However, feel free to continue following my articles. It seems to have become a minor obsession of yours.

Dad Mzungu said...

The UK pound is worse off than most other currencies, including the shilling, due to the policies of our Government, who insist that all the problems come from the USA.
And it looks like we are about to follow the Mugabe route and print more, much more.
And we don't have a gold reserve to fall back on, Gordon Brown sold that off when gold was at its cheapest for many years.
I can't wait to move to Kenya!

coldtusker said...

Dad Mzungu: Inflation is pretty high in Kenya though this affects the 'poor' more than the other socio-economic groups.

I hope the US$ depreciates vs the KShs but that will also hurt Kenya since most exports are in US$ (tourism, flowers, tea, etc).

Kenya benefits from a strong GBP since tourism from UK is a mainstay of Kenya's tourism. Of course, so does a strong Euro...

Kenya's imports are primarily oil (so a weak $ helps) & goods from Japan & China.

So all-in-all... a weak KShs might be better but no weaker than 80/-