Kenya’s central bank vows to stabilize shilling

The Central Bank of Kenya (CBK) on Tuesday vowed to stabilize the value of the Kenyan shilling which has weakened sharply against the U.S. dollar.

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kenya shilling
kenya shilling
Spining

CBK Governor Patrick Njoroge told a media briefing in Nairobi that the value of the local currency has been declining partly due to indiscipline in the foreign exchange (forex) market.

kenya shilling
kenya shilling

“We are trying to get proper adherence to the rules to ensure greater oversight of the forex dealers,” Njoroge told journalists.

The shilling which is currently trading at 105.3 per one dollar has lost 16 percent of its value since the beginning of the year.

“We saw the exchange rate moving not because of the forces of supply and demand but because information was not evenly shared among market players,” Njoroge said.

Njoroge, who has been in office for only three months said that stability, is returning, but the battle has not been won.

“We need to continuously implement measures and at the same time monitor the forex market,” added Njoroge, who is a former International Monetary Fund (IMF) official.

He said Kenya firmly subscribes to a flexible forex regime. “However, we are aware of the damage that volatility of forex can do to the economy,” he said.

He remained confident that the foreign exchange reserves of 6.1 billion dollars together with the precautionary arrangements with the IMF of 611 million dollars will continue to provide an adequate buffer against short term foreign exchange shocks.

Data from the CBK indicate that Diaspora remittances in Aug. stood at 132.9 million dollars.

Njoroge said lower food and oil prices are expected to continue supporting a low and stable inflation rate. Last month, the country’s inflation rate reduced to 5.8 percent from 6.6 percent in July.

The governor said that in order to promote economic development, the apex bank is working with relevant stakeholders to reduce the high commercial banks’ interest rates.

He noted that some of the measures required to reduce interest rates include promoting innovation by banks so as to lower transaction costs. Enditem

Source: Xinhua

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