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Rising Debt and a Sinking Currency is a Bad Combination For Kenya

SIMON MAINA / AFP

Kenya’s embattled currency, the shilling, sank even further on Monday, dipping to an all-time low of 115 against the U.S. dollar, prompting renewed concerns that the country will soon face a dramatic economic reckoning. 

The problem is that every time the shilling depreciates against the dollar it means that the Central Bank has to spend more of its hard currency reserves to service the country’s ballooning foreign debt, mostly dollar-denominated, and to cover the cost of imported goods, also priced in dollars.

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