NAIROBI, Kenya, October 24-Central Bank of Kenya (CBK) Governor Kamau Thugge says Kenya has been trying to maintain an ‘artificially strong’ currency over the last 6 years.
Thugge maintains that this has led to the scale down of the international reserves, a factor he says only became obvious last year.
”I think we try to maintain a fairly artificial strong exchange rate but also at the cost of loss of international reserves .That overvaluation became obvious last year,” said Thugge.
Thugge has asserted that the local currency has been overvalued for a long period of time, creating an illusion of a stronger local denomination.
His statement comes against the backdrop of a dwindling shilling even as the local currency recorded the heaviest plunge in years.
A spot check by Capital Business revealed that the shilling is currently trading at ksh 150.01 against the US dollar.
The CBK boss has attributed the plunge to the difference in valuation overtime between the foreign and domestic capital inflows. Only weeks ago did Thugge say that the exchange rate pressure would cool very soon.
The expected stabilization of the shilling he said would be buoyed by declining imports and rising exports, among others.
Kenyan shilling has been under intense pressure from capital outflows as major economies such as the United States increase their base lending rates to contain inflationary pressure.
Importers of goods have also been lining up for dollars, exacerbating the problem.
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