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{
    "id": 1342549,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1342549/?format=api",
    "text_counter": 152,
    "type": "speech",
    "speaker_name": "Prof. Njuguna Ndung’u",
    "speaker_title": "The Cabinet Secretary for National Treasury and Economic Planning",
    "speaker": null,
    "content": " Hon. Speaker, as of 22nd September 2023, the usable foreign exchange reserves held by the Central Bank of Kenya (CBK) was US$6.96 billion. This represents about 3.76 months of import cover. Commercial banks keep deposits in dollars and other currencies, in accordance with statutory ratios set by the CBK. Foreign currency deposits held by commercial banks have remained constant with trade growth currently standing at US$1.15 billion as of June 2023 from about US$921 billion as of December. These are customers’ accounts and deposits. In a sense, it is not hoarding, but it is the customers’ accounts that they are holding. In response to the second part of the Question, the exchange rate details are released by the CBK. It is an indicative rate meant to help those exchanging currencies to gauge the value of the shilling at any given day. The CBK does not set the exchange rate. It is determined by the market. The CBK receives actual exchange rates transactions from commercial banks and forex bureaus every day and computes the mean rates from these numbers. The mean rate is quoted as the exchange rate of the day. If you look at any newspaper in the morning, you will see a table that provides all these details. The mean rate that is quoted gives us an idea of the value of the currency. Individual forex bureaus and commercial banks set their own rates which are held to reasonable levels of variance and even margins due to competition in the market. Essentially, customers are free to move from one bank or forex bureau to the other. Typically, consumers looking to exchange smaller amounts and focusing on the nominate exchange rate available will find more favourable rates at forex bureaus, while those looking to exchange larger amounts through their foreign accounts will find better rates in commercial banks. That variability can be seen in the table. Hon. Speaker, in response to the third Question, Kenya pursues a flexible exchange rate policy which allows the price of the Kenya Shilling to be determined by the market. As of March 2023, the CBK issued a forex code that is intended to promote a robust, fair, liquid, open and appropriately transparent market which in a diverse way sets the market rate. The market participants participating in that market will get their confidential bids. This is supported by a resilient infrastructure, including inter-bank trading infrastructure which we can confidently and effectively say it has transacted competitively in the market, since it was re- established. We believe that this is an area we are going to look into. We will show that as we improve the infrastructure and more trading is done at the inter-bank market, it will be competitive. What we see in the analysis even in the newspapers most of the time is the variability; the variance between trading partners. It is important to note that the key factors responsible for the depreciation of the currency include the adjustment process and global dollar shortage that ignited this shortage. I will now go to Question 216/2023. Globally, countries are setting up alternative currencies for trade. The de-dollarisation debate which aims at reducing the dominance of the USA dollar is the force behind that. In actual fact, what will happen in the payment system because this is the effect of the payment system, countries will adopt a payment system that is currency-neutral. It means that they will not be de-dollarised but they will make sure that the The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}