The new Central Bank of Kenya (CBK) boss, Kamau Thugge, will have a tough start stabilizing the depreciating Kenya Shilling against the US dollar.
The shilling first crossed the 140-unit mark last Friday, piling pressure on the country’s cost of living, with commodity prices expected to hit a record high given that Kenya is an importing nation.
Thugge, who took charge as the 10th CBK governor on Monday, will also have to deal with speculative unscrupulous dealings in the foreign exchange market.
President William Ruto had accused some players in the foreign exchange market of hoarding dollars hence the shortage. To address this, the Head of State announced that his administration would lay some measures that would allow oil marketers to purchase fuel using the local currency to ease demand for the dollar.
“We just concluded a market-driven arrangement in our fuel sector that will see Kenya access all our fuel needs on a deferred six-month credit that will eliminate a demand of USD 500 million dollars every month from this market.”
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“I am giving you free advice that those of you who are hoarding dollars shortly might go into losses. You better do what you must do because this market is going to be different in a couple of weeks.” Said President Ruto
Kenya being an import-dependent country, relies on foreign currency to make purchases, and this puts extra pressure on the CBK reserve.
Over the last 12 months, the shilling has shed about 10 percent of its value to the dollar, with the effects evident in the country’s inflation rate, which hit a high of 9.1 percent in December.
On top of Thugge’s new assignment is also how to bring down Kenya’s rising public debt, which is now approaching the Sh10 trillion cap as well as cutting the level of foreign borrowing.
Thugge was appointed as the new CBK governor on May 15 by President William Ruto. Prior to his appointment, he served as Head of the Fiscal and Monetary Affairs Department at the National Treasury, Economic Secretary and Senior Economic Advisor, Principal Secretary at the National Treasury, and Senior Advisor to the President and Head of Fiscal and Budget Affairs.
