“We’re watching keenly hoping that the situation is not going to persist very long and that stability will be restored for Egyptian buyers to be back in the market,” Musau said.
Tea is one of the most important commodities in Kenya and a leading exporter to United Kingdom and Middle East countries including Egypt. Tuesday saw the market sinking low due to poor turnout during the weekly tea auction, an indication that a majority of buyers are based in troubled Egypt.
Although the shilling held steady against the US dollars on Wednesday amid fears of coming under pressure due to Egypt’s civil unrest, the move was not quite significant when it traded at 86.75/95 per dollar from 86.80/87.00 on Tuesday.
Exactly a week ago the shilling dropped 1.2 per cent against the dollar in line with other risky assets on expectations that the U.S. Federal Reserve will push the unwinding of its stimulus.
On Tuesday the Central Bank warned business traders to brace themselves for a harsher season likely to affect the price of oil and tea export.
The outlook on Kenya’s economy seems to be taking a downstream trend as highlighted by the East African Breweries latest move to raise beer price for the second time in four months due to input prices.
“I think what this information sends to the market is that probably they are struggling in moving volumes and so that’s why they are taking this decision to hike prices in order to support profitability. They’ve just closed their full year so we’re awaiting their 2013 result,” said Musau.