The Central Bank of Kenya Governor Kamau Thugge has opened up on the fight that saved the Kenya shilling from total collapse in the first quarter of 2024. The CBK Governor said that the shilling was salvaged after the Central Bank initiated a series of deliberate steps to tame it.

This was against the public statement the Central Bank had made indicating that it would leave the shilling to market forces. However, alarm bells became too loud in January when the shilling crossed the 160 mark against the US dollar, with predictions showing that if nothing was done, it would hit over 200 by the end of this year at worst, and at best settle at around 170.

According to Thugge, some of the measures the CBK took included the tightening of the benchmark interest rate, the inter-bank market, and the announcement of a partial repayment of the Eurobond and the subsequent repayment This repayment helped to reassure an agitated market on Kenya’s fiscal status after fears the country would default.

Last week on Friday, Kenya settled the remaining Eurobond balance amounting to Sh. 72 billion ($560). Currently, the shilling is quoted at 128.6 to the US dollar, with Forex Bureaus in Nairobi trading at 128 buying and 129 selling.

Kenya uses World Bank loan to pay off Sh. 72 billion Eurobond debt balance

Thugge explained that some of the measures he has undertaken include the allowing of an electronic trading system and the lowering of the minimum transaction recorded as a forex  interbank deal from $500,000 to $100,000.

Despite the gains made the shilling, the local currency is yet to return to the below 119 to the greenback mark at which the current administration took it over from. According to Thugge, it is difficult for him to tell whether the shilling has peaked in its gain or not.

“It is difficult to say whether we are at an equilibrium or not. What we are trying to have is a market-determined exchange rate that will respond to what is happening in the current and financial account,” Thugge told a local newspaper.

He spoke as some analysts in the international forex market predicted that the Kenya shilling might retreat to close the year at around 145 to the US dollar.