Kenyan households are braced for higher energy and food costs as a result of the ongoing threat of war between Russia and Ukraine, which has sent global oil prices soaring and restricted wheat exports.
The conflict could also trigger a sell-off of shares, pulling down a market that has fully recovered from the economic damage caused by the Covid-19 pandemic.
A major risk event usually sees investors rushing back to bonds and the safest assets in what could hurt the flow of foreign investors to the Nairobi Securities Exchange (NSE) given the foreigners account for 58 percent of trading at the bourse.
The Russian invasion of Ukraine risks further fanning oil prices — and therefore inflation through costly transport, electricity and other manufactured goods.
Disruptions from any military action or sanctions could also see bread and wheat flour prices rally in Kenya, which relies on imported wheat from Ukraine and Russia.
Russian President Vladimir Putin on Monday called an unscheduled ‘extraordinary’ meeting of his full security council amid fears he is about to give the order for the invasion - sparking a bloody war and the most serious standoff between East and West since the Cold War.
Moscow has been threatened with sanctions if it invades Ukraine by western powers, which include being denied the chance to trade using the dollar, crippling its ability to trade with countries such as Kenya.
Russia is the fourth-biggest buyer of Kenyan tea, having taken up produce worth Sh6.2 billion in the 11 months to November 2021.
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