The Central Bank of Kenya has been reported commenting on how the shilling is performing against the dollar as global oil prices rise. The exact rate changes daily, so check the CBK website for the figure on the day you need it. What does not change is the way the exchange rate reaches your pocket: through the price of imports, fuel, duty and VAT. This article explains how, and what to do if you import or sell goods priced in dollars.

Why oil prices and the shilling are linked

Kenya buys its oil in dollars. When oil gets dearer, the country needs more dollars, and more demand for dollars puts pressure on the shilling. A weaker shilling then makes every other import dearer too. The central bank can use its reserves to steady the currency, which is why its comments get so much attention. The result for you is the same either way: the cost of imported goods depends on the dollar price and the exchange rate together.

How the exchange rate reaches your tax

If you import, duty and VAT are worked out on the value of the goods in shillings. That means a weaker shilling raises the shilling value, and so the tax, even if the dollar price of the goods stays the same. Use the import duty calculator to see the duty on a shipment, and the landed cost calculator to add freight, clearing and VAT to get the true cost per unit. The guide on how to calculate import duty on goods walks through each step, and the VAT calculator handles the VAT part.

What it means for each kind of reader

Importers: your landed cost can move between the day you order and the day you pay. Build a margin for exchange movement. The import duty and landed cost workbook works out the full cost of each shipment, and paying overseas suppliers safely covers fees and fraud checks when you send dollars.

Businesses that sell or buy in dollars: each sale or payment can produce a gain or a loss from the exchange rate. The foreign currency sales and exchange difference tracker records the difference so your books are right.

Shop owners and consumers: expect imported goods and fuel to feel the pressure first. The free competitor price comparison sheet helps you check your prices against others before you change them.

Five steps for anyone exposed to the exchange rate

  1. Price in a buffer. Add a margin for movement when you quote goods that you must buy later in dollars.
  2. Lock in what you can. Where a supplier or a bank offers a fixed rate, compare it with the market rate.
  3. Order with care. Your first shipment: a small-budget import plan shows how to start small while you learn.
  4. Check the rate on the day. Use the official rate in your calculations, not an old one.
  5. Keep every document. Invoices, bank advice and customs entries should all match.

Mistakes to avoid

  • Using last month's rate. It can differ enough to change your margin.
  • Forgetting the VAT on top of duty. VAT is worked out on the value plus duty, so a rise in one raises the other.
  • Ignoring the fees. Banks and payment services charge to convert and send money. They add up on large orders.

Where to find more tools

All our import and pricing tools are on the templates page, and the calculators are free.

Frequently asked questions

What is the shilling rate today? It changes daily. Check the Central Bank of Kenya website for the official figure.

Does a weak shilling always mean higher prices? For imported goods and fuel, usually yes, though other factors such as global prices and stock levels also matter.

Do I pay tax on exchange gains? Gains and losses from business dealings in foreign currency can affect your taxable profit. Keep records and ask a tax adviser about your case.

This article is general information, not financial or tax advice. Check CBK and KRA for the figures that apply to you.

Sources and further reading