CBK rubbishes claims of dollar shortage by manufacturers

According to the reserve bank, the country’s current FX market remains liquid with US dollar transactions rounding off to Ksh.233.5 billion ($2 billion) on average each month.

The CBK says dollar requirements by the manufacturers barely scratches the monthly cap.

“For a sector importing goods worth between $90 and $100 million monthly, the figure is nowhere near the $2 billion we are putting out there,” said CBK Governor Patrick Njoroge on Tuesday.

“Such players should understand that they are small in that sense and should go to market like anyone else. There are no favourites in the market. Follow the rules of the market and everything will be okay. It is interesting that some of the people writing to us don’t have positions and are not in the (FX) market, they are traders.”

CBK’s dismissal of the dollar shortage reports comes in the backdrop of a new update by the Kenya Association of Manufacturers (KAM) stating that they continue experiencing difficulties in accessing US dollars from the market.

“In the most extreme cases, supplies have been cut or delayed as credit limits from the manufacturers’ suppliers have been breached. This is also feared to affect trade insurance in the future,” KAM said in a statement.

“From the foregoing it would appear that the market is losing confidence in the transparency and effectiveness of our foreign exchange market.”

CBK nevertheless admits instances of prior significant demand for dollars as companies remitted dividends to foreign investors at the close of the 2021 financial reporting period.

On the exchange rate, the CBK says the pricing of the Kenyan shilling, which has in the year shed three per cent of its value against the US dollar, remains in line with other peers.

“We are quite confident about the levels of our depreciation,” added Dr. Njoroge.

The Central Bank quoted the Kenya Shilling at Ksh.116.73 cents against the US dollar at the close of trading on Monday.