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{
    "id": 565589,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/565589/?format=api",
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    "content": "There is an elaborate answer and the Senator has a copy. But I will very briefly mention the responses. Mr. Temporary Speaker, Sir, on the cause of the depreciation, first, I want to inform the House that the depreciation of the currency is not unique to Kenya only. In the last few months, literally most of the major currencies have had challenges in terms of depreciation. The Kenya shilling, for example, lost about 7.7 per cent of its value between January and May this year. But if you look at some of the other currencies, starting from Ghana going down to many other countries, you will find that the range is between 3 to 28 per cent. Specifically, with regard to the cause of the depreciation of the Kenya shilling, there are a number of reasons. One, the United States (US) dollar has strengthened in the global currency market, due to the strong recovery of the US economy and the weak Euro-zone growth recovery, among other things. Secondly, the supply of the US dollars from our traditional sources has also declined. I will give an example. There is low supply of foreign exchange from tea and tourism. The amount of money that comes in from that has declined significantly. There has also been a reduction in the foreign exchange earnings from other areas like tourism, because of the adverse travel warnings. However, at least, there has been some mitigation from the remittances that we get from the diaspora. Thirdly, the demand for the US dollars to finance imports of capital goods has also increased significantly in the country. There is a higher demand for dollars, as a consequence of increased economic activity, for example, import of machinery and equipment from mid-2014, mainly towards infrastructure development and fleet modernization by Kenya Airways. There have also been imports of capital goods to enhance economic growth in the short-term. For example, there has been a lot of investment in infrastructure in roads, railways and so forth. All these require a lot of dollars for imports. However, again, there has been mitigation from the lower international oil prices. So, the amount of money that we are spending on oil has also been lower but the demand for dollars has gone up. The fourth reason of the cause of depreciation is that there has been a stable gradual weakening trend over the years. The Kenya shilling generally has been going down over the years. The reason for this is that whereas our imports have been increasing, our exports have either been stagnant or declining. This is reflected clearly in the current account deficit that we have seen in our economy in the last few years. If we do not export, then the foreign exchange that comes in declines significantly, yet because of the expansion of our economy, the imports have been increasing significantly over the years. Those four major reasons are the cause of the depreciation. Mr. Temporary Speaker, Sir, the Member also wanted to know what measures the Government is taking to address this issue. The policy measures adopted by the Central The electronic version of the Senate Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor, Senate."
}