Ruto’s Administration Points Finger at Uhuru for Kenyan Shilling Drop

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Ruto’s Administration Points Finger at Uhuru for Kenyan Shilling Drop

President William Ruto‘s government has accused the former Jubilee administration of overestimating the value of the Kenyan shilling.

Kamau Thugge, the governor of the Central Bank of Kenya (CBK), addressed Members of Parliament on this matter.

He stated that the shilling was overestimated by approximately 20 to 25%, indicating that the ongoing depreciation of the currency would persist.

Thugge acknowledged that the country had been trying to maintain an “artificially strong exchange” rate, and he clarified that the Kenyan currency was now finding its genuine value.

He further explained that this overvaluation became evident in 2022 when inflation soared to unprecedented levels, surpassing the CBK’s rate of 5% to 7.5%.

“I think for several years now, we have had an overvalued exchange rate. In fact, if you go back six years ago, there was a raging debate as to whether the Kenyan shilling exchange rate was overvalued, and at that time, the Bretton Woods institutions felt that actually the exchange rate was overvalued by anywhere between 20 to 25%,” Thugge remarked.

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President William Ruto’s economic advisor, David Ndii, made allegations regarding the CBK’s actions under the previous governor, Patrick Njoroge. Ndii asserted that $2 billion (KSh 300.2 billion) had been spent to prevent the shilling from weakening, insinuating that the former regime had manipulated the local currency.

“What Dr Thugge said about CBK propping up KSh shouldn’t be news. I wrote about it five years ago. The CBK under Njoroge burnt $2b of reserves, propping up Sh,” he posted on X.

Regarding the current exchange rate of the Kenyan shilling against the US dollar, on October 26, the CBK quoted it at 150.17.

Forex bureaus purchased dollars at prices ranging from KSh 152 to KSh 153 and offered them for sale at prices between KSh 156.50 and KSh 157.

FX Pesa’s leading market analyst, Rufas Kamau, attributed the shilling’s decline to rising fuel costs and elevated US interest rates.

He mentioned, “”The currency’s 2.3% monthly decline to the dollar is expected to continue and perhaps accelerate as the US commits to higher rates for longer and oil prices keep cruising higher.”

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Ruto’s Administration Points Finger at Uhuru for Kenyan Shilling Drop

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