The pressure on the local currency has been high owing to the dollar scarcity that has afflicted the economy. This has made the dollar to trade at unprecedented high prices in banks and forex bureaus.

A spot-check on Wednesday across multiple banks showed that they were selling dollars to customers at between Sh140.55 and Sh144.50 while buying the greenback at between 128.20 and Sh131.40 per unit.

Consumers are buying dollars at between Sh141 and Sh146 per unit in forex bureaus, who are getting the US currency at between Sh135 and Sh138.

The dollar shortage has become a point of concern as secondary effects like the rising cost of living are becoming dire with each passing day.

This shortage has also led to the emergence of a black market in the foreign exchange market

Those with dollars are finding they can get a better rate by bypassing banks and selling directly to individuals and firms in need.

 

The firms are buying the US currency at lower rates than those quoted by the banks.

 

This is creating a parallel shadowy market, which is in breach of the law and has the potential to trigger a range of economic problems including discouraging foreign direct investment (FDI), encouraging rent-seeking and reducing the interbank FX market.

 

The dollar shortage is the product of rising dollar demand being driven by increased shipments of raw materials and equipment as inflows from traditional sources such as agricultural exports and tourism fail to keep up with demand.