NAIROBI, Kenya, Feb 7 – The stabilisation of the Kenyan shilling has gained momentum, driven by the inflows of foreign currencies into the country.
The Central Bank of Kenya (CBK) Governor, Kamau Thugge, said on Wednesday that recent steadiness in the local forex market will help the local currency gain its value.
CBK also expects the hike of its key lending rate by 50 basis points to 13 percent yesterday to shield the home unit from losing additional value.
“The Kenyan shilling has been stable for the last few days and as CBK we expect this stability to continue because we have taken action to raise the Central Bank Rate higher from 12.5 per cent to 13 per cent,” Thugge said during a post-Monetary Policy Committee (MPC) meeting early today.
Since Shilling has overshot its intended equilibrium target range, the apex bank added that it is focused on protecting the local unit from further declines in value.
“The rate is currently elevated but we believe with the actions we have undertaken as CBK and the expected inflows of foreign exchange the rates should stabilize and move toward the rate that is consistent with the strong Macroeconomic fundamentals,” said the CBK Governor.
Apart from foreign interests in Kenyan Treasury bills and bonds, the country has also gotten financing support from the World Bank and the International Monetary Fund (IMF), which have increased its dollar reserves.
“We have resources—the money that is coming in from the World Bank, regional institutions, and multilateral institutions. Our access to the capital market will contribute to the strengthening of the Kenyan shilling,” he added.
