The Kenyan currency fell short to the US dollar after the announcement of the arrest of the National Treasury Cabinet Secretary, Henry Rotich was made.
According to CBK statistics, the shillings dropped and traded at 103.67 units to the dollar on Monday, slipping from Friday’s 103.1 shillings after Director of Public Prosecutions (DPP) Noordin Haji, ordered the immediate arrest of the CS.
The DPP made the announcement that Mr. Rotich was involved in the mismanagement of 46 billion shillings, that was to be used for the construction of the Kimwarer and Arror dam projects in Elgeyo Marakwet County.
This is a clear signal sent by the investors of how unease they are due to the vacuum left by Rotich at the Finance Ministry.
In November 2017, the same situation was witnessed where the shillings dropped drastically against the US dollar due to political and economic crises in the country.
Kenya’s Eurobond at the international markets also felt the effect of Rotich’s arrest as data from Tradeweb revealed.
Tradeweb’s data showed that Kenya’s dollar bonds maturing in 2028, 2032 and 2048 slipped around 0.5 cents.
The investors at the National Security Exchange defied the arrest effects and had market capitalization standing at 2.283 trillion shillings on Monday as compared to Friday’s 2.281 trillion shillings, a 0.07 percent rise.
Meanwhile, financial experts suggest that the president should take quick action to ensure new appointments as soon as possible.
“Changes in finance ministers in emerging countries are always tricky; markets want to know the policy that is already crafted will not be reversed,” opines Deepak Dave, a risk management expert, Riverside Capital, Nairobi.
Mr. Dave also added that without the Treasury Cabinet Secretary and the Permanent Secretary, who was also arrested, certain appointments cannot be made; certain large disbursements would presumably stop, and the budget would need to be moved through Parliament by a new team so it may lose speed.
According to the Directorate of Criminal Investigation (DCI), George Kinoti, the two are expected to be arraigned in court today, to face the graft charges against them.