There are some very rich people who are currently purchasing the dollar like there was no tomorrow. They are all betting that the shilling will inevitably lose some major ground against the green buck towards the end of the year and closer to the general elections and they want to cash in big.
In all likelihood some of them hope to finance the last crucial leg of the general elections using the cash that they will reap from this speculation.
So are they correct in their assessments and predictions?
Their reasoning is that as politics inevitably gets pretty ugly in the final stages of the general election campaigns, dollar inflows will slow down dramatically and in many cases cease altogether, causing the shilling to lose a lot of ground and thus give them the sort of margins that will have the speculators laughing all the way to the bank.
Seems to make a lot of sense. Especially when you consider that even Kenyans repatriating dollars back home for all sorts of development projects are bound to halt things as we go through the electioneering period.
It all seems to make plenty of sense.. Except that this kind of thinking ignores two major factors. Firstly the very high probability that there will be major dollar inflows to finance the general elections, both from politicians with substantial foreign accounts and also from foreign interests seeking to quietly influence the outcome of these crucial general elections in their favor. In fact emerging evidence on the ground is that these elections will attract the kind of record spending and cash inflows that will make the 1992 general elections (where money was being distributed in cartons) look like a joke in comparison.
Naturally this sort of thing is bound to be inflationary which should put lots of pressure on the shilling.
It is definitely not a sure thing, what these speculators are banking on, but we shall have to wait and see.
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