Central Bank of Kenya Governor Kamau Thugge. Photo | Kenya Banking Insights.
The Central Bank of Kenya (CBK) has dismissed claims that the country is manipulating its currency, stating that all foreign exchange market interventions are geared towards cushioning the shilling from volatility rather than gaining any trade advantage.
Speaking during a media briefing, CBK Governor Dr Kamau Thugge said the movement of the exchange rate reflects genuine market dynamics, noting that Kenya’s external sector has shown marked improvement over the past year.
“This issue of manipulation of the shilling exchange rate again just to reiterate what is reflected in the exchange rate is really the forces of supply and demand,” said Dr Thugge.
He further attributed the stability of the shilling to a positive balance of payments, robust export performance, and a steady current account deficit.
“We’ve had very good performance in terms of exports, travel receipts, and capital inflows. The current account has been relatively steady at 2.8 percent of GDP. All we have really tried to do is to avoid fluctuation and volatility in the exchange rate,” he added.
According to the CBK boss, recent interventions have enabled the country to build up its international reserves to the highest level in Kenya’s history.
“We have been able to build these external buffers by increasing our reserves and because of that, we have seen a stability of the exchange rate,” he noted.
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The remarks come amid scrutiny from international quarters, following global concerns over how developing economies respond to exchange rate pressures. However, the CBK maintains that its policy interventions are compliant with international monetary standards.
In recent months, the shilling has shown signs of recovery after months of depreciation, with analysts attributing the improvement to reduced dollar demand and better-than-expected diaspora remittances and tourism earnings.
