Weakening Shilling Value Not Cause for Alarm, Says CBK Governor

By Wilkister Alao

The Central Bank of Kenya governor Dr Patrick Njoroge has shrugged off concerns about the weakening value of the shilling against the US dollar, saying that the shilling remains only a little subdued.

Speaking during a press conference on Kenya’s demonetization, Dr Njoroge said that despite claims by analysts that the shilling was reacting to the planned removal of the old 1000-shilling note series from circulation to help fight illicit financial flows, money laundering and counterfeiting, the market reaction was not related to the shilling performance.

“We need to be more relaxed on the shilling. A little difference to its value recently is nothing in the bigger picture of things,” he said.

He further explained that the old 50, 100, 200, and 500-shilling notes will phase out slowly but the 1000-shilling note will be illegal, effective October 1, 2019.

Amana Chief Investment Officer Reginald Kadzutu said, “There is more demand for dollars due to capital inflows and outflows. However, there is more demand for dollars as people get out the 1000-shilling notes.”

Banks quoted the shilling at 101.65/85 per dollar, compared with 101.55/75 by Thursday and 101.95/102.15 per dollar on Monday and between 101.80/102 per dollar by Friday’s close.

However, Dr Njoroge said that his officials have stepped up market surveillance and that they have “more than enough firepower” to deal with any volatility in the value of the shilling.

This comes after the Kenyan Shilling has managed to stay firm against the ever-strengthening dollar even as other countries in Africa bowed down to the pressure.

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