21/05/2026
What impact do currency fluctuations have on small and medium-sized enterprises (SMEs)? This is a very important question that every business owner should ask themselves, especially in today's ever-changing economy.
KES EXCHANGE RATE UPDATE – 21 MAY 2026
Major global currencies
1 US Dollar = KES 129.57
1 Sterling Pound = KES 174.02
1 Euro = KES 150.56
Regional currencies:
Uganda Shilling = 29.13
Tanzania Shilling = 20.18
Rwanda Franc = 11.28
Below is brief analysis of how these changes affect your business and how you can protect yourself.
1. Raw Material and Product Costs (Import Costs)
If your business imports goods or raw materials from abroad, if the value of your local currency falls, you will need more money to buy the same goods. This reduces your profit margins or forces you to raise prices, which can drive away customers.
2. Market Competition (Export Advantage/Disadvantage)
On the other hand, if you are exporting, if the local currency depreciates, your products become cheaper and more competitive in the international market. However, if the currency suddenly strengthens, you could lose market share because your products will be more expensive for foreign buyers.
3. Cash Flow Unpredictability
Predicting income and expenses becomes very difficult when the value of a currency fluctuates. You may agree on a purchase price today, but when you pay the invoice 30 days later, you find yourself paying a much higher amount due to the change in exchange rates.
4. Tax and Accounting Implications
Currency changes result in foreign exchange gains or losses (forex gains/losses). Legally, these gains are taxable, and losses can reduce your taxable income. Accurately reporting these transactions in your books is essential to avoid fines from the tax authorities.
How to Protect Your Business
• Forward Contracts: Set up an exchange rate agreement with your bank/supplier in advance for future transactions.
• Diversification: Seek local suppliers where possible to reduce over dependence on foreign currencies.
• Modern Accounting: Use accounting systems that can track multiple currencies (multi-currency) accurately.
At Tertec Tax and Assurance Ltd, we help businesses understand the financial and tax implications of currency fluctuations through:
✔ Tax consultancy
✔ Financial reporting
✔ Business advisory
✔ Cash flow and profitability analysis
Stay financially informed. Smart businesses track both taxes and market trends.
Send a message to learn more
