Kenya’s Finance Ministry is encouraging the central bank to intervene whenever necessary to smooth volatility in the country’s exchange rate, Permanent Secretary Joseph Kinyua said.
“The central bank should be able to support genuine dollar demand from the market to ensure the variation does not affect the normal market situation,” Kinyua said.
East Africa’s biggest economy will receive $240 million next week, part of a syndicated loan agreed on earlier this month, which will help support the currency, Kinyua said in an interview today in Nairobi, the capital.
The shilling has weakened 3 percent this month, the biggest monthly decline since a 7 percent retreat in September. Kenya’s trade deficit widened in March as fuel imports rose to the highest in seven months, the Kenya National Bureau of Statistics said yesterday on its website. The gap increased 22 percent from a year earlier to 80.3 billion shillings ($938 million).
The pressure on the shilling has been caused by increased imports to support infrastructure projects, and that should ease soon, Kinyua said.
The shilling weakened as much as 1.1 percent today before reversing its loss to close 0.6 percent stronger at 86.20 a dollar in Nairobi.