The Central Bank of Kenya (CBK) on Wednesday, March 22, introduced six new guidelines to commercial banks in a bid to ease the country's current dollar shortage.
In a statement, the CBK published Kenya Foreign Exchange Code (the FX Code), the guidelines were aimed at improving transparency in the foreign currency market.
According to the regulator, the guidelines would guarantee ethical and clear transactions to curb the relentless biting shortage.
“It will facilitate better functioning of the market, further reinforcing Kenya’s flexible exchange rate regime. The FX Code is intended to promote a robust, fair, liquid, open, and appropriately transparent market,” the statement read in part.
CBK instructed commercial banks to monitor all forex transactions and file compliance reports on a quarterly basis. The banks would also be required to deploy experienced personnel who possess the technical know-how on forex trading.
In addition, commercial lenders would be prohibited from handling forex transactions in areas of conflict such as receiving gifts as well as corporate entertainment offers.
CBK also directed lenders in the country to establish special boards that oversee forex trade businesses. The banks were instructed to develop remuneration and promotion structures and were also banned from engaging in trading strategies or quoting prices with the intent of compromising market integrity.
The new regulations came in the wake of dollar shortage, that has piled pressure on imports including fuel as the Kenya Shilling continues to depreciate.
President William Ruto directed oil brokers not to hoard dollars as the government would transact using Kenyan shillings.
"As a Government, we have made innovative intentions and undertaken an innovative strategy to ensure that we ease the burden of the availability of the dollar in our market.
"We just concluded last week an arrangement in our fuel sector that will see Kenya access all our fuel needs in a differed six-month credit.
"That will eliminate a demand of Ksh65 billion ($500 million) every month from this market," the President stated during the listing of Laptrust Imara (REIT) at the Nairobi Security Exchange (NSE) on Wednesday, March 22, 2023.
On Thursday, March 23 the Kenya shilling was trading at 130.90 against the US dollar.
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