MPs to grill CBK boss on shilling’s slide

By David Ochami

Central Bank of Kenya Governor Njuguna Ndung’u has been summoned to appear before a select committee of Parliament investigating last year’s depreciation of the Kenyan shilling.

The committee chaired by Wajir West MP Adan Keynan was created late last year when the shilling plunged to record lows against foreign currencies amid reports that the free fall was engineered by speculators.

Prof Ndung’u was the first witness to testify before the committee on November 25, but he declined to name banks he had earlier accused of unethical behaviour.

Instead, the governor blamed the collapse of the Kenyan currency on global factors including the European debt crisis and structural weaknesses within the local economy.

MPs accused of him of arrogance saying he was engaging in lengthy academic speeches that did not identify the short-term causes of depreciation.

The committee met other experts and witnesses, including former CBK Governor Micah Cheserem, who disputed Ndung’u’s reasoning on this matter. The committee is now slated to meet and interrogate Ndung’u on Wednesday.

Manipulation

In a letter signed by Senior Deputy Clerk of Parliament P C Owino confirmed the meeting, it indicated that the committee would seek further information on whether the governor took any action against institutions suspected of manipulating the money markets leading to the currency crisis.

Reports indicate the MPs want Ndung’u to disclose any warning letters to institutions suspected of involvement in unethical practices in the foreign exchange trade. The committee will also be seeking information of how banks utilised the CBK discount window and details of their participation in the inter-bank market.

"The committee is also aware that the Central Bank of Kenya may have taken regulatory interventions and visits to various financial institutions regarding the sudden fall of the Kenya shilling in 2011," the letter states in part.