By JAMES ANYANZWA
President Kibaki has called for strong action against speculators seeking quick financial gains at the expense of the economy.
Kibaki said unscrupulous market players were posing long-term consequences to the economy.
"No one has the right to take advantage of the country’s open market policies to enrich themselves," he said, adding that the Government would ensure there is orderly trading in the money markets for liquidity and foreign exchange.
"It is critical that all stakeholders play by the rules at this time of turbulence in the international financial markets."
Weakening shilling
Kibaki’s sentiments come two months after the Central Bank of Kenya (CBK) blamed the weakening shilling on speculation by four large commercial banks.
In June, the CBK Governor Njuguna Ndung’u said an audit by the regulator showed that in just one week, between June 9 and June 16, five banks exported over $260 million while the volume of borrowing from CBK went up in a similar period, suggesting arbitrage opportunities.
Last month, the shilling touched an all-time low of 93.58 against the dollar. Ndung’u said the shilling’s slide was an overreaction driven by speculation that there were not enough exchange reserves to meet the country’s needs, but traders said there was fundamental demand from importers.
Speaking during the official listing of the British American Investment Company Ltd shares at the Nairobi Stock Exchange Thursday, Kibaki said the Government will be taking action to take care of the welfare of Kenyans. He also said the Government has requested for more disbursement from the International Monetary Fund under the ongoing Extended Credit Facility. The move is intended to deal with challenges of weakening shilling, soaring inflation and high interest rates.
"We expect the disbursement to be front loaded to ensure ample supply of foreign exchange to finance required imports without putting pressure on the shilling," said Kibaki.
Kibaki said the economy has also been battered by unstable prices in the global economy associated with the financial and debt problems in Europe and US.
