SAVING THE KENYAN SHILLING


The Central Bank of Kenya (CBK) has moved to steady the shilling, which has recently weakened against the dollar beyond the Sh100 psychological peg and made the foreign exchange market volatile.
CBK governor Patrick Njoroge has said he is currently working on eliminating disorderly market developments and is monitoring the situation closely.
“The CBK stands ready to enhance its open market operations and other measures, including intervening through the direct sales of US dollars to commercial banks to stem a sharp depreciation of the Kenya shilling,” he said in a press statement yesterday, adding that CBK’s foreign exchange reserves remain adequate to stabilise the exchange rate against the short-term shocks.
The shilling could remain under pressure in the week ahead on account of worrying current account deficits coupled with less dollar earnings from tourism following an economic assault led by terror attacks.
Challenges include domestic factors such as dollar requirements arising from large corporate deals and temporary liquidity surge in the banking system which have put the shilling under intense pressure in recent times. Yesterday, the shilling traded at an average Sh102.05 to the dollar.
To tame excess liquidity, CBK plans to mop up Sh2 billion from the money markets to make it more expensive for traders to hold dollars. However, the drastic slide of the shilling against the dollar could be making Kenya a cheaper tourist destination, in what could see a surge in the number of holidaymakers into the country.

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