The Central Bank of Kenya is apparently struggling to keep the Kenya Shilling from losing value against the dollar according to Kenyan bankers.
According to a recent report on a Kenyan daily, insider anonymous sources from Kenyan banks say that CBK has been clamping down on bankers that put in a higher bid than what is offered by the CBK.
SEE ALSO: Kenya Ranked Top 5 in the World on Global Cryptocurrency Activity, Reveals Chainalysis Report
The regulatory over-reach however might not hold long as they go against the undeniable forces of demand and supply.
In a worst-case scenario, a dollar black market might emerge, if it has not done so already.
Currency Crisis
The Central Bank of Kenya is losing grip on the Kenya shilling pic.twitter.com/cjNfPcUkRt
— Kioneki (@pesa_africa) September 24, 2020
The report paints a grim picture of a CBK that will not allow bankers to post a high price on an inter-bank platform restricting them from selling dollars at a high price in an effort to stop price distortion.
As a result, banks cannot sell publicly to other banks thereby creating an artificial shortage that drives prices even higher.
As of this writing, the rates are as follows:
- CBK rate – KES 108.5 / $
- Inter-bank – KES 113 / $
The report points to a possible KES 115 / $ as the actual value which is not being reported in order to keep the value at the KES 108 CBK rate.
The above may not be surprising considering the following:
- Kenya imports 3x more than it exports
- Diminishing portfolio investments from hedge funds in the bonds and stocks market
- IMF has claimed the Kenya shilling is being managed and should be allowed to depreciate
- Demand for Bitcoin and other cryptocurrencies in Kenya is on the rise
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