The Central Bank of Kenya Governor Dr Patrick Njoroge has said there is sufficient foreign currency to meet demand, brushing off manufacturers who warned a shortage of dollars affects their ability to do business.
Last week, the Kenya Association of Manufacturers, an industry lobby group, said importers are struggling to import raw materials because they can’t access dollars at the official rate of about KSh116 shillings per dollar, forcing them to buy at a rate of KSh 120 or higher.
The lack of availability of foreign currency may create “a parallel shadow market with unwanted consequences,” it said in a statement.
CBK distributes $2 billion per month
Kenya’s foreign-exchange market generates and distributes about $2 billion a month, which is enough to meet all demand in the economy, Central Bank of Kenya Governor Patrick Njoroge told reporters in Nairobi last week.
“If you have a sector that is importing $90 million or $100 million, that is nowhere near the $2 billion that we are putting out,” Njoroge said. The manufacturers association “should understand that they’re small, in that sense, and go to the market like everyone else.”
The shortage highlighted by KAM is one that other economies in Africa are facing. A similar issue in Malawi forced the central bank to devalue its currency by 25% in May.
While there has been pressure on the shilling recently as companies seek dollars to pay dividends, that demand has waned, Njoroge said.
CBK figures indicate that the Kenya Shilling fell to a record low on Tuesday, a day after the CBK raised the benchmark rate for the first time in almost seven years.
It weakened as much as 0.3% to 117.18 per dollar before paring its losses to trade little changed at 116.82 by 2:50 p.m. in Nairobi.
“There are no favourites in the market,” Njoroge said. “Follow the rules of the market, and everything will be ok.”
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