This archive report was first published on 25 July 2019.
On July 25, 2019, the Central Bank of Kenya (CBK) attributed the ongoing slide of the Kenyan shilling to increased foreign payments by the private sector.
CBK Governor Patrick Njoroge stated that private sector actors have been making external payments beyond the usual monthly settlements, leading to new demand for foreign currency and relatively outdoing inflows into the economy.
The increased offshore payments have spelled doom for the shilling, whose value continues to grapple with an expanded flow of money in supply over the last month.
Despite the challenges, CBK has played down risks of volatility in expectations of a calm in foreign currency demand on one side.
“Some of the imbalances will sort themselves out. Even as the usual end-month demand from importers persists, we would expect inflows to increase,” said Governor Njoroge.
CBK has backed its stored firepower represented by a solid external payments account, with the narrowing of the current account deficit to 4.2 percent of GDP in 12 months to June 2019 from a higher 5.4 percent in May of 2018 propping up the foreign exchange market to retain its relative stability.
