Will Kenya's oil price boost be lost to the coronavirus pandemic?
The fall in the oil price will benefit oil-importing countries such as Kenya, but the benefits may be lost because of the African continent's over-reliance on trade with China.
Kenya's Energy and Petroleum Regulatory Authority (EPRA) reduced petrol prices at the pump by KSh2 ($0.019) per litre on Friday – the first reduction in Kenya this year – after the oil price crash slashed import costs on the commodity.
Diesel prices also fell around KSh3 and kerosene by approximately KSh7 a litre as authorities passed on price cuts to the consumer.
"Lower oil prices are certainly a net positive for the Kenyan economy and, with prices so low, we do expect to see an improvement in the trade deficit," says Murega Mungai, who manages the FX trading desk for AZA, a non-bank currency broker.
"We also expect the local currency to strengthen in the medium term from the current 103.50 levels as there will be less pressure on the shilling from oil purchases. We see inflation levels coming down from the current 6.37%, considering the importance of oil to major sectors of production," he says.
|Yvonne Mhango, Renaissance Capital
Kenya's trade deficit shrank by KSh15.55