The Kenya Bankers Association (KBA) has contradicted a statement reportedly issued by the Central Bank of Kenya (CBK) asking financial institutions to ration the dollars following a prolonged scarcity in the country.
Through a statement dated Tuesday, April 26, the bankers refuted claims that they had been directed by CBK Governor, Patrick Njoroge, to ration the supply of the US dollar to prevent the situation from worsening.
The bankers instead explained that they are engaging CBK to address the current strong demand for the US currency in the market.
"We have been in constant contact with the Central Bank of Kenya to address the strong demand of dollars in the market. The Central Bank, having the best view of the market situation, has assured us that the market is well balanced in terms of supply and demand of dollars. The situation at the individual bank level may differ leading to some banks experiencing a shortage and therefore taking decisions to help service their customers to the best of their ability," KBA explained.A file image of the Central Bank of Kenya in Nairobi.FileBusiness Daily
The bankers attributed the shortage to the high demand by companies to make overseas remittances for supply of various goods and services in the country.
Higher petroleum and food import costs due to the ongoing crisis between Russia and Ukraine have also strained the country’s forex stocks.
"The strong demand of dollars being felt in the market may be attributed to elevated demand over the last month or so as companies remit dividends and meet their overseas supplier obligations in the wake of strong post-Covid-19 recovery. However, the supply of foreign currency continues to grow supported by receipts from the country's monthly remittance report," bankers added.
A previous report by Business Daily had indicated CBK had directed banks to ration the dollars to avoid huge panic buying and protect reserves amid the global outlook that has worsened in the recent months.
The Kenya Association of Manufacturers (KAM) also raised the issue of dollar shortage in the market. KAM noted that the shortage could trigger an imbalance of trade which would eventually affect the price of common commodities in the country.
Despite most Kenyans using local currencies to make transactions, the impact of this US dollar on the country's economy is significant as it plays a central role in determining prices of goods and some services offered in the country.An image of cooking oilfile
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