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Understanding Currency Depreciation: The Case of KES vs USD.

What Is Currency Depreciation?

Currency depreciation is the decline in the value of one currency relative to another and is caused by several factors, including economic instability, inflation, and changes in interest rates. It significantly impacts individuals and businesses, eroding the value of savings and investments and making imports more expensive.

What Causes Currency Depreciation?

There are various reasons why the Kenyan shilling has lost value against the dollar, including:

  • Interest rate hikes by the Federal Reserve Bank of the United States. This has resulted in the U.S. dollar rising in value relative to other currencies, including the Kenyan shilling. Higher interest rates make it more attractive for investors to hold USD.

  • An increased dollar demand from oil retailers and general goods importers. The Russo-Ukraine conflict exacerbated this, which triggered global oil inflationary pressures.

  • Policy changes and economic reports have dampened the investment outlook in Kenya. Investors make decisions based on projected outlook. Kenya’s perceived ultra-aggressive taxation policy has pushed investors away while others began selling their interests to fund capital deployment in other jurisdictions.

The Impact of Currency Depreciation in Kenya in 2023

The Kenya shilling has depreciated against the U.S. dollar by over 17% this year. Kenyans now spend 17.5% more shillings than they would have at the beginning of the year to buy the same amount of dollars.

Similarly, money not invested at the beginning of the year has also lost its value by 17.5%. Therefore, if you had KES 100,000 on January 1st, 2023, and didn’t invest it, it will be worth the same as around KES 82,500 today.

This depreciation has had several negative consequences for the Kenyan economy, including:

  1. Higher inflation: The cost of imported goods and services has increased, which has led to higher inflation.

  2. Reduced purchasing power: Kenyans’ purchasing power has decreased, as their money can buy less than it could before.

  3. Increased cost of borrowing: The Kenyan government and businesses have to pay more to borrow money in foreign currencies.

  4. Decreased foreign investment: Foreign investors are less likely to invest in Kenya when the shilling depreciates.

Is your money sitting in the bank? Here’s an eye-opener.

A table demonstrating the impact of currency depreciation on bank savings in Kenya in comparison with investing in ndovu's Techie Fund.

Imagine this. In the last five years, John’s savings in the bank have lost 30% of its value due to the Kenya shilling’s depreciation against the almighty dollar. This means that his purchasing power has decreased by 30%.

Now imagine this. Jane invested her savings in ndovu’s Techie Fund, profited from currency depreciation by 31%, and earned annual returns of 26.4%*(based on the fund’s past performance). While having a bank savings account is acceptable, you must invest some of your income in other stable currencies like the dollar.

How Can You Benefit From Currency Depreciation With ndovu?

There are many things that individuals and businesses can do to protect themselves from currency depreciation. These include:

  1. Invest in foreign currencies: Investing in foreign currencies, such as the U.S. dollar, can help to protect your wealth from the depreciation of the Kenya shilling.

  2. Investing in dollar-denominated investments, such as U.S. stocks, ETFs, and bonds, can also help protect your wealth from currency depreciation.

  3. Diversifying your portfolio: Diversifying your portfolio by investing in various assets, including foreign currencies and support, can help reduce your risk from currency depreciation.

We recommend holding some of your finances in USD-denominated assets to protect your wealth from currency depreciation. The dollar is more stable and predictable than the Kenyan shilling. Moreover, holding USD assets provides a way to diversify your portfolio and reduce the risks associated with the Kenyan shilling.

At ndovu, we provide easy and affordable access to US Dollar-based investments through our ETFs (Exchange-traded Funds).

What are ETFs?

Simply put, an exchange-traded fund is an investment fund that allows you to buy a large set of individual stocks or bonds in one purchase. Once you select an ETF, you’re invested in multiple companies at once, which is a terrific entry point into investing if you don’t know where to start.

ETFs have historically been proven to be an excellent countermeasure to inflation. As the dollar strengthens, diminishing the purchasing power of currencies such as the Kenyan shilling, one should consider dollar-denominated ETFs to protect themselves from currency depreciation and inflation.

At ndovu, we offer a wide range of ETFs, including the Gold ETF, Halaal ETF, Techie ETF, and Healthcare ETF. With as low as $50, you can begin your investment journey and build your wealth in USD.


All ETF products are subject to risk, including country/regional, liquidity, and currency risks. Market prices of securities within the ETF may rise and fall, sometimes rapidly and unpredictably.

While ETFs provide diversification through exposure to a basket of securities, they do not eliminate the risk of loss. Diversification does not ensure a profit or protect against a loss. These are non-cis products and are registered by the SEC.


ndovu is a regulated Robo-Advisory platform operated by Waanzilishi Capital Limited (‘Waanzilishi’). Waanzilishi is a fund manager licensed by the Capital Markets Authority (Kenya) and a Data Controller Registered by the Office of the Data Protection Commission.

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