Following a recent warning by the United States to Kenya to stop manipulation of the Kenya Shilling against the dollar during ongoing talks for a bilateral trade pact, the Central Bank of Kenya (CBK) governor has come out to address these concerns.
Speaking to the media, the CBK Governor, Patrick Njoroge, said:
“The bottom line is, yes, Kenya is negotiating with the United States and there are specific 27 areas indicated as objectives which are well put together. This is not a statement that Kenya is a currency manipulator.
We have a flexible exchange rate regime and we intervene to minimize volatility. We don’t target a rate and we allow the market to determine the rate. We, of course, make sure the actors in the market, including banks, follow the rules so we do not have predatory behavior.”
The governor referenced a trade negotiation document between the United States and the United Kingdom which was the exact blueprint template when it comes to currency manipulation concerns.
What is the actual position on Kenya’s trade negotiations with the United States? What’s the place of the currency in these negotiations? There’s nothing unusual going on, as Governor @njorogep explains. pic.twitter.com/RWOXFhgLuM
— Central Bank of Kenya (@CBKKenya) September 30, 2020
The United States, as a pre-condition in the Free Trade Deal (FTA), has echoed past concerns by the International Monetary Fund (IMF) that has previously said that the Kenya Shilling is overvalued by 17.5%.
Part of the FTA raft of conditions between Nairobi and Washington says:
“Ensure that Kenya avoids manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competititive advantage.”
The governor also highlighted the movement of the Kenya Shilling performance in comparison to other currencies globally calling it ‘modest.’
“Any concerns about movement are misplaced. We have indicated what our interest is and we will maintain it at that because it has served us well.”
~ CBK Governor, Patrick Njoroge
Governor @njorogep on the exchange rate policy, the media’s persistent erroneous coverage of the subject and…Manchester United?
Cheza kama wewe. pic.twitter.com/NBUAub0nVR
— Central Bank of Kenya (@CBKKenya) September 30, 2020
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