This archive report was first published on 26 July 2019.
Kenya's central bank governor, Patrick Njoroge, played down the impact of graft charges against Finance Minister Henry Rotich on the country's economy, attributing the recent fall in the shilling to seasonal demand for dollars.
On Thursday, the shilling lost 0.8% since the charges against Rotich were announced on Monday, trading at 104.05 per dollar, as traders fretted about a power vacuum at the finance ministry.
However, Njoroge dismissed these concerns, stating that there are processes and mechanisms in place to ensure a smooth transition at the finance ministry.
President Uhuru Kenyatta appointed Labour Minister Ukur Yatani as acting finance minister on Wednesday, a day after Rotich was charged with various corruption charges.
Njoroge attributed the shilling's weakness this week to excess liquidity in the money markets, which makes it cheaper to fund dollar purchases, and increased hard currency demand from private companies.
He also pointed out that seasonal demand for dollars from companies to pay dividends to their overseas shareholders had contributed to the pressure on the shilling.
Despite the recent decline, Njoroge expressed optimism about the economy, stating that it is likely to grow by at least 6% this year, driven by a stronger-than-expected recovery in its key agriculture sector.
The economy grew by 5.6% in the first quarter, slowing from 6.5% in the same period a year earlier, mainly due to the impact of dry weather.
However, the rains unexpectedly came in late April, brightening the outlook for the economy.
