The government has laid down measures to strengthen the Kenya Shillings against the US dollar in consistent with the macro-economic fundamentals.
- According to Central Bank of Kenya’s Indicative Exchange Rates, the shilling is at 160.3 against US dollar.
- Central Bank of Kenya (CBK) Governor Kamau Thugge said the government has appointed lead advisors for access of loan from the international market
- Multilateral lenders have continued pumping money into the economy which is expected to stabilize the shilling.
The International Monetary Fund and Trade Development Bank have disbursed $684 million and almost $400 million respectively into the economy over the past few months. The World Bank is expected to disburse another $1.5 billion between March and April.
“Our policy is to allow the market forces to determine the exchange rate, however we do intervene when we see that there is exchange rate volatility. It is our view that the exchange rate has overshot the equilibrium rate and we have a scope to support the exchange rate,” said Kamau Thugge.
“The increase of Central Bank Rate by 50 basis points should also serve to strengthen the exchange rate, we are issuing infrastructure bond and we are seeing a huge interest from the foreign investors giving us hope of foreign exchange flow,” he said during a post Monetary Policy Committee Briefing.
- Thugge said following the success of Ivory Coast and Benin in accessing the international market, Kenya is hopeful to access the market but will wait for lead advisors to give further direction.
- CBK Monetary Policy Committee decided to raise the Central Bank Rate (CBR) from 12.50 percent to 13.00 percent as an additional measure to stabilize the exchange rate.
- Cote d’Ivoire’s Eurobond saw a subscription of over $8 billion from more than 400 investors as the country successfully raised $2.6 billion through two bonds with tenures of eight and 13 years respectively, at single-digit interest rates.
The proposed action will ensure that inflationary expectations remain anchored, while setting inflation on a firm downward path towards the 5.0 percent mid-point of the target range, as well as addressing residual pressures on the exchange rate.