The value of the Kenyan shilling has hit the lowest of all times as it currently stands at 150 against the US Dollar.
This development has seen the Central Bank of Kenya Boss Kamau Thugge get grilled by the Parliamentary Finance and National Planning Committee on Tuesday where he explained why the Kenyan shilling has depreciated that much.
“There is an excess demand for dollars. In August 2023, the supply exceeded the demand, and this is one of the structural issues to give a larger supply of dollars over time. In June -September, there was a slowdown in depreciation because of this increased supply,” he explained.
He noted that the exchange rates will take time to be reduced. He also advocated for reforms that will ensure that supply exceeds demand sustainability.
“The rate cannot be reduced in a month; we need a continuous system that ensures sustainability. Decline in international reserves caused overvaluation of the exchange rate. In 2022, the aggressive rise in interest rates was done to curb inflation. That affected the foreign exchange rate,” Thugge said.
Aside from that, the CBK boss urged the country to invest in medical tourism that will ensure there is enough flow of dollars into the country
“We need to invest in Medical Tourism regionally to increase the flow of reserves and foreign reserves. In 2022-2023, Kenya had Ksh.1.3 billion in returns, with Tanzania making double in terms of travel receipts.”
