CBK defends Kenya shilling valuation

The Central Bank of Kenya (CBK) governor Patrick Njoroge has reiterated that the Kenyan shilling is properly valued and that its value is only dependent on the forces of demand and supply.

In a post-Monetary Policy Committee meeting presser in Nairobi, Dr Njoroge said that the value of the shilling against other currencies such as the US dollar has no any fundamental miscalculation as has been suggested by International Monetary Fund and other analysts.

“There has been a lot of discussion about our exchange rate assessment and the exchange rate policy— We don’t have a view about the level or direction of the shilling. We let the market drive the price of the shilling,” said Dr Njoroge.

‘We only intervene to minimise volatility in the market since volatility can be destabilising in the foreign exchange market and other areas of the market.”

He said that CBK relies on several approaches in doing this and said that the level of any misalignment of the shilling, if any, is in the region of five per cent. 

The governor told the press that CBK will soon upload on its website a comprehensive explanation of the approaches it uses on the shilling, adding that any intervention measures are only disclosed to the market at an appropriate time not to cause jitters.

The shilling has come under spotlight since September when IMF terminated Kenya’s access to a Sh152 billion ($1.5 billion) precautionary facility.