Kenya’s President William Ruto has come out to advise citizens and investors to let go of their US dollar holdings as a means of reducing demand for foreign currency. This article explores the measures announced by him and the collaboration between the Kenyan government and the Central Bank of Kenya to reform the exchange market, giving the country more control over its currency market.
Why President Ruto is Advising Kenyans to Ditch the US Dollar
The value of the US dollar has been decreasing in recent times due to a combination of global factors such as the Russia-Ukraine war, and the increase in the US money supply. These factors have led to a decline in the purchasing power of the US dollar, making it less attractive to hold for investors and individuals alike.
In light of this, he has advised them to let go of their US dollar holdings to reduce demand for foreign currency. This move aims to stabilize the Kenyan shilling, the country’s currency, and reduce the country’s dependence on foreign currency.
Measures to Reduce Demand for Foreign Currency
To reduce demand for foreign currency, President Ruto has announced measures that will enable oil importers to buy oil using shillings instead of dollars. This move will help reduce the demand for dollars, which has been a major cause of the depreciation of the Kenyan shilling. This move will also help reduce the cost of importing oil, which is a significant contributor to their balance of payments deficit.
Collaboration Between the Kenyan Government and the Central Bank of Kenya
The government is collaborating with the Central Bank of Kenya to reform the exchange market, helping the country regain control over its currency market. One of the measures being implemented is the establishment of a forex trading platform that will enable them to trade in foreign currency. This move aims to provide the citizens with access to competitive exchange rates, reducing their reliance on unregulated money changers.
The Central Bank of Kenya has also introduced measures to improve the regulation of forex bureaus, which play a significant role in the exchange market. The measures include the requirement for forex bureaus to register with the Central Bank of Kenya and adhere to strict reporting requirements. This move aims to reduce the risk of money laundering and other illicit activities in the exchange market, promoting transparency and accountability.
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Impact of the Measures on the Kenyan Economy
The measures announced by the President and the collaboration between the its government and the Bank are expected to have a positive impact on the its economy. The move to reduce demand for foreign currency will help stabilize its shilling and reduce the country’s dependence on foreign currency. This move will also help reduce the cost of importing oil, which is a significant contributor to Kenya’s balance of payments deficit.
The establishment of a forex trading platform and the improved regulation of forex bureaus will provide its with access to competitive exchange rates, reducing their reliance on unregulated money changers. This move will also promote transparency and accountability in the exchange market, reducing the risk of money laundering and other illicit activities.
President Ruto has also announced measures to enable oil importers to buy oil using shillings instead of dollars, which will help reduce the demand for dollars and reduce the cost of importing oil, a significant contributor to their balance of payments deficit.
The government is collaborating with the Central Bank of Kenya to reform the exchange market, providing Kenyans with access to competitive exchange rates and reducing their reliance on unregulated money changers. The measures will also promote transparency and accountability in the exchange market, reducing the risk of money laundering and other illicit activities.
