Garissa Town MP Aden Duale had pointed an accusing finger at the National Treasury and the Central Bank of Kenya (CBK) for the dollar shortage in the country.
In a statement, Mr Duale said the weakening of the shilling, which had seen it exchange at a low of 118.5 against the US dollar, is not due to external factors.
“Bad fiscal policies by the National Treasury and bad monetary policy and regulations by the governor of the Central Bank constricting the inter-bank forex market have led to this US dollar shortage crisis in the country,” he said.
Some of the external factors that have been blamed for the weakening of the shilling include the Russia-Ukraine war, which has pushed up the prices of such items as oil, fertiliser and wheat.
Because prices of these items in the global market have shot up, it means that traders need more dollars, which are not necessarily being replenished as fast through exports, tourist earnings and diaspora remittances.
The tightening of the US monetary policy by the Federal Reserve in what is aimed at addressing inflationary pressures has seen interest rates in the world’s largest economy rise.
This has, in turn, meant that investors get better returns in the US compared to emerging market economies like Kenya.
It has seen a lot of foreign investors exit the Nairobi Securities Exchange for less risky assets in their home countries.
But Mr Duale insists that some countries like Zambia, have actually seen their currency strengthen against the dollar, signalling that it is not just about external factors.
CBK Governor Dr Patrick Njoroge is on record saying that the country had enough dollars, following complaints from manufacturers that they had problems accessing the hard currency. [Dominic Omondi]
“The CS (Cabinet Secretary) for the National Treasury (Ukur Yatani ) has continuously failed to implement policies addressing the worsening negative trade balance the country is facing. The Central Bank Governor has resorted to threats and bullying of commercial banks instead of providing clarity on price signals of the country’s inter-bank foreign exchange,” he said.
Duale also blamed Dr Njoroge for abandoning Kenyans, who are forced to pay a high price for the dollar after forex traders, including commercial banks, erected a parallel market.
“The Central Bank Governor is well aware that the commercial banks are selling the US dollars at exaggerated dollar prices of up to Sh128 for $1 US dollar,” said the lawmaker.
“Why has the Governor of the Central Bank not taken any action against commercial banks who are fleecing Kenyans and making huge profits from the wide spread between the prevailing bank rates and the Central Bank of Kenya’s official rate of Sh118 for $1 US dollar?”
The legislator regretted that local manufacturers, who mainly rely on imported raw materials, have been forced to shut down because they cannot access dollars at the official market rates.
Pwani Oil Refineries, which manufactures Fresh Fri cooking oil, is one of the companies that at some point was forced to shut down one of its plants in Kilifi county due to, among other things, a shortage of dollars.
Those who have not shut down, Duale said, have been forced to buy the greenback from the black market at an exaggerated rate of up to Sh130 for $1 US dollar.