{"id":80848,"date":"2023-01-19T15:25:14","date_gmt":"2023-01-19T15:25:14","guid":{"rendered":"https:\/\/www.africa-press.net\/kenya\/all-news\/gloomy-outlook-for-kenya-as-interest-rates-projected-to-rise"},"modified":"2023-01-19T15:25:14","modified_gmt":"2023-01-19T15:25:14","slug":"gloomy-outlook-for-kenya-as-interest-rates-projected-to-rise","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/kenya\/all-news\/gloomy-outlook-for-kenya-as-interest-rates-projected-to-rise","title":{"rendered":"Gloomy outlook for Kenya as interest rates projected to rise"},"content":{"rendered":"

Africa-Press – Kenya. <\/strong><\/span>Kenyans are staring at tough economic times and expensive household budgets after the shilling hit a historic low against the dollar to trade at Sh124.00. This has set stage for higher commodity prices for the imported goods and experts reckon that the trend is set to continue for longer in 2023.<\/p>\n

Sanlam Investments East Africa 2023 investment themes and outlook, show that the shilling will continue to remain under pressure in 2023, as developed economies counter inflation by tightening monetary policies.<\/p>\n

From the report, currency pressure remains a key risk to interest rates outlook not only in Kenya but the region at large. Sanlam chief investment officer Shritesh Nanji said global shocks have exposed Kenya’s vulnerability due to higher debt to GDP ratio, and exposure to foreign currency debt.<\/p>\n

\u201cThe rise in global interest rates has strengthened the dollar and resulted in capital outflows from emerging and frontier markets back into hard currency assets. This has limited the capacity of developing countries to access international debt markets causing significant challenges and vulnerabilities,\u201d said Nanji.<\/p>\n

The exposure is coming at a time that Kenya is facing a Eurobond repayment of $2 billion (Sh248 billion) in June 2024. Sanlam projects that the increased pressure on the currency could further exacerbate the pressure on interest rates. Kenya faces significant currency pressures on account of external debt repayment obligations expected in 2024.<\/p>\n

\u201cWe expect the CBK to prioritise foreign debt service repayments. The government will increasingly rely on multilateral agency funding, commercial syndicated loans, and the CBK forex reserves to fund foreign debt maturities,\u201d a report by Sanlam released yesterday, reads in part.<\/p>\n

Sanlam deputy chief investment officer Dan Gathogo said interest rates in Kenya will likely remain elevated in 2023, given the funding requirements of the government and the requirement for the Central Bank of Kenya to manage inflation.<\/p>\n

Historically, low interest rates in advanced economies have been positive for developing economies. The recent rise in global interest rates and US Dollar strength has resulted in capital outflows from Emerging and Frontier markets, as US Dollar assets have become more attractive.<\/p>\n

This has also limited the capacity of developing countries like Kenya to access international debt markets, causing significant challenges and vulnerabilities to these economies.<\/p>\n

Gathogo said after a 23.4 per cent market decline in 2022, stock market valuations are now cheaper and could represent an attractive entry point for long term investors.<\/p>\n

“However, US Dollar strength and elevated yields in local government bonds could still dampen investors participation at the securities exchange,\u201d he said.<\/p>\n

The continued depreciation of the local currency, which has taken the shilling\u2019s year-to-date losses against the dollar, is expected to push up living costs and hurt households that are already grappling with high fuel and food prices.<\/p>\n

The outlook points at strict credit control measures this year, where CBK could increase rates in 2023 to manage the inflationary pressures and global risks.<\/p>\n

Sanlam expects the global economy to slow down in 2023 and there remains a risk that some of the world\u2019s major economies could enter a recession later in the year.<\/p>\n

For More News And Analysis About Kenya<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Kenya. Kenyans are staring at tough economic times and expensive household budgets after the shilling hit a historic low against the dollar to trade at Sh124.00. This has set stage for higher commodity prices for the imported goods and experts reckon that the trend is set to continue for longer in 2023. Sanlam […]<\/p>\n","protected":false},"author":84,"featured_media":80846,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[6857,7003,544],"class_list":["post-80848","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-kenya","tag-kenya"],"yoast_head":"\nGloomy outlook for Kenya as interest rates projected to rise - kenya<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/kenya\/all-news\/gloomy-outlook-for-kenya-as-interest-rates-projected-to-rise\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Gloomy outlook for Kenya as interest rates projected to rise\" \/>\n<meta property=\"og:description\" content=\"Africa-Press – Kenya. Kenyans are staring at tough economic times and expensive household budgets after the shilling hit a historic low against the dollar to trade at Sh124.00. This has set stage for higher commodity prices for the imported goods and experts reckon that the trend is set to continue for longer in 2023. 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