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Kenya warns forex traders against making comments or forecasts about the shilling

Nairobi - Kenya’s central bank warned bankers and traders against making comments or forecasts about the shilling that it deems too negative amid the currency’s worst run of losses since 2006, according to people familiar with the matter.

Executives from some of the country’s biggest lenders were summoned to meetings with policy makers last week, the people said, asking not to be identified because they aren’t authorized to speak about the issue. Others were telephoned individually and warned against making comments the regulator says are fuelling the shilling’s decline, they said. Grace Okara, the central bank’s communications director, acknowledged by phone that she’d received an e-mailed request from Bloomberg for comment, without responding to the questions.

 

Central bank officials blame speculators for the slide in the currency of East Africa’s largest economy, and told bankers to let the shilling be guided by market fundamentals, the people said. The central bank’s stance is that the more people comment on the currency’s movements, the steeper its decline, they said.

Read also: SA's Zuma touts opportunities in Kenya

Kenya’s shilling has weakened every trading day since December 23, according to data compiled by Bloomberg. The currency depreciated as the dollar strengthened after the US Federal Reserve raised interest rates and as investors wary of previous post-election violence in Kenya grow increasingly cautious ahead of a presidential vote in August.

 

The warning by the central bank echoes its criticism of lenders in 2011, when the currency fell to a record. That year, former Governor Njuguna Ndung’u accused banks of using funds from its overnight discount window to place speculative bets on the the shilling.

Market fundamentals

The shilling closed 0.1 percent weaker at 103.90 in Nairobi on Monday. It may depreciate to 110 per dollar by the end of the year, as the central bank has limited capacity to support the currency because of falling reserves, Cytonn Investments Ltd. investment manager Martin Oduor told reporters in the capital, Nairobi, on Monday. Traders have also cited increased demand for dollars by fuel importers as oil prices rise.

 

Kenya’s foreign-exchange reserves declined to $7.1 billion by Jan. 5 from $7.8 billion in October after the central bank intervened to support the shilling in the fourth quarter of last year, Cytonn said in a research note.

 

 

“The central bank does not have the power or the capacity to support the shilling,” Oduor said Monday.

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Champara
Kampala
Uganda
Freedom of speech!!!!. How is he gonna control peoples mouths.
Reply    Favorite    Flag as Abusive    Posted at: 1/10/2017 4:24:22 PM
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southboy

Great

Reply    Favorite    Flag as Abusive    Posted at: 1/14/2017 4:07:32 AM
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southboy

3rd

Reply    Favorite    Flag as Abusive    Posted at: 1/14/2017 5:14:42 AM
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southboy

4th

Reply    Favorite    Flag as Abusive    Posted at: 1/14/2017 5:31:20 AM
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