President William Ruto has explained why the Kenyan shilling has weakened against the US dollar.
Speaking on Sunday night during a joint media interview at State House, Ruto said the shilling was initially stable because the government was maintaining an artificial exchange rate of the local currency against the dollar.
"The issue of the exchange rate is a factor of many aspects. I came into office when there was a fluid of activities such as COVID-19, drought and others that combined to change the situation globally," he said.
"In Kenya, we were maintaining an artificial rate. We were maintaining it using our foreign exchange reserves. The Government of Kenya used 2.6 billion dollars in supporting the Kenyan shillings so that it does not go to the actual rate."
The President said that the current exchange rate is the steepest interest increase in history after the US Central Bank started increasing interest rate on dollar purchase about two years ago.
The President, however, said the Government-to -Government deal the government entered with oil producing countries helped ease pressure on dollar demand and helped fix the exchange rate.
"If it were not for the Government-to-Government deal the government, the Dollar would have hit Sh200. The US Central Bank began increasing the interest rate," he said.
According to data from the National Treasury, the Kenyan shilling is currently exchanging at Sh153.7382 per dollar.
The President said the G-G deal is one of the many measures that has helped the country stabilise the exchange rate because of deferred payment that does not require oil markets to buy dollars in bulk.
Ruto said Uganda and Tanzania have somehow steady shilling against the dollar Ruto because Kenya is a bigger importer than her neighbours.
"We are a different economy compared to Tanzania and Uganda. We import more than them. We are a middle-income economy and they are something else," he said.
The President, however, said the government has cut down on imports and this has helped ease pressure on the dollar and stabilise the shilling.
More to follow...
