The Impact of Exchange Rate Fluctuation on Coffee Exports in Kenya

This research examined the impact of exchange rate fluctuations on Kenyan coffee exports, which is a critical sector for foreign exchange earnings in Kenya, over the period 1990–2023. The objective is to assess both the long-run and short-run effects of exchange rate fluctuations on coffee export performance in Kenya, alongside other macroeconomic variables like inflation and GDP, to inform policy measures for enhancing the coffee sector in Kenya. This analysis focused on annual data of coffee exports, which is the dependent variable, with exchange rate, inflation, and GDP as the independent variables. These data were sourced from the World Bank, the IMF, the Central Bank of Kenya, and Kenya’s National Treasury, totaling 34 observations. It is a quantitative study that employs a time-series econometric approach, utilizing the Johansen Cointegration Test and a Vector Error Correction Model (VECM). The empirical findings indicate that exchange rate depreciation positively affects Kenyan coffee exports in the long run. However, in the short run, the effects of exchange rates on coffee exports are insignificant