The weakening of the Kenya shilling is not about to end. And if you are expecting the government to come to its aid, then you are mistaken.
On Friday November 17, 2023, President William Ruto echoed what has become the modus operandi of his government – blaming the previous government in which he served as the Deputy President.
The president, while defending the G2G oil deal that has been labeled as a scam by former Prime Minister Raila Odinga, President Ruto said that the Kenya shilling was being artificially propped up by the government of former president Uhuru Kenyatta.
He claimed that the former government had used up to USD 2 billion to prop the shilling. “This is a liberal market, we will do what we have to do, we will export more, manufacture more to strengthen our shilling,” he said.
This came as the shilling inched closer to the 160 mark against the US dollar. The president’s new claim are in sharp contrast to what he had claimed was behind the weakening shilling in April 2023.
In April, the president and his deputy Rigathi Gachagua had claimed that the shilling was weakening as a result of people who were hoarding dollars. The president pitched that the G2G oil deal would ease the pressure off the shilling.
He said that within a matter of weeks, the shilling was going to recover to highs of between 115 and 120 against the US dollar. This never came to be.
During his vetting for the position of Governor of the Central Bank of Kenya, current Governor Kamau Thugge also alluded to the hoarding theory, and said that once he took over from former Governor Patrick Njoroge, he would issue a dollar-dominated bond.
“One of the things that I would like to explore with the National Treasury is the possibility of actually issuing a dollar-denominated bond, the way we issue an infrastructure bond, and we structure it and sell it locally,” Thugge had said.
“If we can get those Kenyans who are holding dollars in their deposits to buy into it… we will have a possibility of actually increasing the liquidity of dollars in the system but also building up foreign exchange in the Central Bank.”
A few weeks ago, Thugge stated that the shilling was falling helplessly because it was artificially strong.
The CBK Governor alleged that the shilling was overvalued for six years under the presidency of retired President Kenyatta.
He alleged that it dawned on the government of current president William Ruto that the shilling was overvalued after taking power.
The Governor said that the International Monetary Fund (IMF) and the World Bank had said that the shilling was being manipulated to stay strong by the government of former president Uhuru.
As the shilling continues to fall, the National Treasury and President Ruto have since changed position to now claim that the shilling is falling because of former President Uhuru.