Kenya is facing a severe dollar shortage, which has triggered the emergence of parallel exchange rates. The shortage has seen lenders buying and selling dollars at rates above the official rate, according to the Kenya Association of Manufacturers (KAM).
As of Friday, the official exchange rate was 116.81 units, but KAM members, who are the biggest importers of goods, were buying dollars at more than Ksh120. This volatility in the exchange rate market has slowed dollar trading among lenders, further worsening the scarcity of the US currency.
The central bank has in the past rebuked Stanbic Bank Kenya after a research note issued by its parent, South Africa’s Standard Bank, said a parallel exchange rate was emerging in Kenya. This forced Stanbic Bank Kenya to issue a public statement distancing itself from the research note.
“Although the formally quoted exchange rate for the US dollar in the market is hovering around Ksh115-116, none of our members can access currency at that price in the market. The real market price is now above Ksh120,” KAM chairman Mucai Kunyiha said in a statement.
The lack of access to adequate hard currency is negatively affecting KAM members’ ability to settle obligations to overseas suppliers in a timely manner. The shortage has strained relations with suppliers, at a time competition for raw materials has intensified globally due to rising demand amid lingering supply chain constraints.
CBK data shows that materials ordered by importers last year amounted to Ksh399.62 billion ($3.4 billion), only dwarfed by machinery and transportation equipment, which was valued at Ksh512.45 billion ($4.3 billion).
