The Central Bank of Kenya has issued new orders in the foreign exchange market targeting the activities of Money Remittance Providers (MRPs).
In a banking circular, Central Bank of Kenya (CBK) has restricted the selling of foreign exchange by MRPs to USD 100,00 per customer per day. “MRPs will therefore be required to only sell FX, in excess of USD 100,000 or its equivalent to commercial banks,” said Gerald Nyaoma, Director, Bank Supervision Department at CBK.
In the recent past, CBK has noted increased participation of MRPs in the wholesale FX without being required to comply with the various guidelines, standards and code of conduct that are in place. Nyaoma said the new directive will create a fair and orderly market.
Currently there are 20 operating institutions which have authorized by Central bank under the money remittance regulations, to conduct money remittance business.
In furtherance of the remittance business, the institutions are authorized dealers under the CBK act to conduct foreign exchange (FX) business.
From time to time the apex bank has issued standards, policies and guidelines for adoption by the participants in the FX market, with the objective of promoting an orderly and vibrant wholesale FX market. Consequently, market participants are required to comply with the guidelines, including maintaining net open positions, minimum transaction values, transparency in disclosures of bid and quotes.
“The guidelines serve to enhance the process of price discovery through transparency in FX pricing and availability of FX and thereby improving liquidity. The latest guideline, the Kenya Foreign Exchange Code was issued in March 2023 with the objective of creating fair, open and transparent practices in the markets to improve liquidity in the FX wholesale market.”