Dollar shortage: Businesses push for equal foreign currency access

Players in Kenya’s private sector have pushed for equal access to foreign currency (FX) from banks as businesses seek a resolution to the widely reported dollar shortage.

On Friday, Kenya Private Sector Alliance (KEPSA) Chief Executive Officer Carole Kariuki held a meeting with Central Bank of Kenya (CBK) Governor Dr. Patrick Njoroge to assess the extent of the dollar crunch and possible solutions.

According to notes from the meeting seen by Citizen Digital, while the reserve bank has previously rubbished talk of a dollar shortage, the CBK has committed to meeting banks to ensure players in the market have equal access to forex.

The reported dollar shortage has been traced to rising global commodity prices which has required local merchant traders to have more dollars to meet input purchases.

Additionally, the high demand for dollars has been previously linked to the payment of dividends to off-shore investors.

Notes from the meeting nevertheless intimate that global pressures may have been misunderstood leading to some agitation from local FX players including the stockpiling of hard currency.

The CBK has asked businesses to use their relationships with banks to meet their forex needs even as it warns of risks of the hijacking of the FX market by shrewd operatives.

Earlier this week, more businesses including those in the automotive industry and travel pointed to increased difficulties in obtaining dollars to meet their purchases.

The CBK has nevertheless insisted that no such shortage exists, while the National Treasury has called developments in the forex market as an artificial shortage created off sentiments of a likely ‘actual shortage.’

The reserve bank states that the local FX market puts out about Ksh.234 billion ($2 billion) in forex supply per month while its official forex reserves remain adequate.

Data from the CBK’s weekly bulletin shows the reserves stood at Ksh.959 billion ($8.2 billion) in the week to Thursday or an equivalent 4.88 months of import cover.

Reports on dollar shortages have meanwhile been tucked alongside the continued weakness in the Kenyan shilling which hit a new low Ksh.117 mark against the green buck this week.

The local unit was quoted at Ksh.117.10 at the close of trading on Friday.