Kenyan manufacturers decry difficulties in accessing U.S dollars

Local manufacturers represented by the Kenya Association of Manufacturers (KAM) say they are having challenges in accessing U.S dollars from their bank.

This to point to ongoing foreign currency (FX) availability constraints in the local money markets.

“Many of our members have had challenges accessing U.S dollars from their banks to meet their international commitments in a timely manner. This puts a strain on supplier relations and the ability to negotiate favourable prices in spot markets,” noted KAM Chairman Mucai Kunyiha.

“Liquidity in the market is critical to allow businesses to focus on their core activities of cost-efficient production and avoid panic buying.”

The revelation by the manufacturers comes as the local currency unit remains under constant pressure largely tied to increased dollar demand and a worsening trading balance for Kenya in the backdrop of a spike in import costs.

Earlier this month, the shilling crossed the Ksh.115 mark against the U.S dollar as it continued setting historical lows on steady depreciation.

In the year to date, the shilling has for instance shed 2.3% of its value against the U.S dollar with the local unit closing at Ksh.115.44 against the US dollar on Wednesday according to statistics from the Central Bank of Kenya (CBK).

Nevertheless, the CBK has played down the magnitude of the weakness saying the valuation of the local unit remains in line with that of other regional and international currencies which are also experiencing the heat of a strengthening dollar index.

At the same time, the CBK has insisted that the local FX market remains liquid and at optimal operations.

Even so, CBK remarks have been put into sharp focus by market participants following the reserve bank’s sanctions to Ecobank Kenya over a large FX transaction with a large tea exporter.

“There is FX liquidity in the market and we continue to observe the market so there is proper behaviour as is required in operating these markets,” CBK Governor Patrick Njoroge said on March 30.