Africa-Press – Kenya. Treasury Cabinet Secretary John Mbadi has dispelled rumours that the government has been manipulating the shilling following its continuous stability against the U.S. dollar.
Speaking during a meeting with the Swedish Ambassador to Kenya, Håkan Åkesson, on Wednesday, the CS claimed that the stability of the Kenyan currency was instead due to “prudent macroeconomic stewardship and growing investor confidence in Kenya’s economic trajectory”.
According to a statement released after the meeting, several initiatives have supported the stability of the shilling against the dollar, including increased returns from diaspora remittances.
“CS John Mbadi has reiterated the resilience of the Kenya Shilling, dispelling claims of currency manipulation and attributing its sustained stability to robust economic fundamentals,” the statement read in part.
In addition to an eight per cent surge in diaspora remittances, he also cited improved export earnings and recent reforms enabling the procurement of fuel without exclusive dependence on the U.S. dollar through G-to-G arrangements.
He relayed that the latter had eased pressure on foreign exchange.
In addition to the stable shilling, which has remained at an average of Ksh129 against the dollar for the past 15 months, CS Mbadi also noted that Kenya’s economy continues to expand at a commendable rate of approximately 5 per cent, with the government targeting a 7 per cent growth path to accelerate employment creation and broaden opportunities.
He attributed the upward momentum to strong performances in key sectors, which continue to anchor the President William Ruto administration’s Bottom-Up Economic Transformation Agenda (BETA).
Over the past year, the Kenyan shilling has fluctuated between Ksh128 and Ksh131 against the dollar, a minute difference that has sparked concerns from experts, including the International Monetary Fund (IMF).
After taking its biggest hit at the beginning of 2024, when it traded at over Ksh160 against the dollar, the shilling gained back to Ksh144 by mid-February and was down to Ksh127 in April 2024. It has averaged between Ksh128 and Ksh131 since.
While speaking to Citizen TV on Monday, November 4, the Kenya Revenue Authority (KRA) Chairperson, Nderitu Muriithi, admitted that the IMF had raised concerns over the stability during a recent visit to Kenya.
“They were in town two weeks ago, and one of the things they told us is that the exchange rate is too stable. Yes, one of the things the IMF told us when they were in town two weeks ago is that the exchange rate is too stable, that they think it is interfering with the transmission and that it is interfering with inflation targeting,” Muriithi said.
However, according to David Ndii, the Chair of President Ruto’s Senior Economic advisors, this stability could not be easily explained, as it was all “witchcraft”.
“A lot of these debates and the IMF asking whether it is too stable or too unstable is basically witchcraft; this is basically witchcraft we economists do, which can go this way or that way, but the policymaker has to be pragmatic,” Ndii said.
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