Companies pile pressure on CBK over dollar crisis

Economy

Companies pile pressure on CBK over dollar crisis


The shortage of dollars is triggering the emergence of parallel exchange rate that has seen lenders buying and selling well above the printed official rate. FILE PHOTO | NMG

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Summary

  • KAM, whose members are arguably the biggest importers of goods, say the CBK should “release” the excess dollars above the statutory levels of four months equivalent of import cover into the market.
  • The foreign exchange last week dropped for the third week in a row to stand at $8.37 billion, or an equivalent of 4.98 months of import cover, last Thursday.
  • The dollar shortage is the product of increased demand being driven by an increased cost of shipments of raw materials and equipment amid persistent global supply chain disruptions.

Manufacturing firms have piled pressure on the Central Bank of Kenya to sell more dollars into the market to ease the persistent shortage, which has prompted importers to place advance orders.

The Kenya Association of Manufacturers (KAM), whose members are arguably the biggest importers of goods, say the CBK should “release” the excess dollars above the statutory levels of four months equivalent of import cover into the market.

“We call upon the central bank to release dollars for importers to access to pay specific bills,” KAM told the Business Daily.

“The Central Bank has over five months of import cover as a reserve, and this can help stabilise the market through the current uncertainties. This would create confidence in the market and ease supplies.”

The foreign exchange last week dropped for the third week in a row to stand at $8.37 billion, or an equivalent of 4.98 months of import cover, last Thursday. This is the lowest level since $8.28 billion, or 4.92 months of import cover, on April 14, according to the CBK data.

The data further shows that the reserves hit a recent high of $8.5 billion, or 5.05…

Read more at www.businessdailyafrica.com

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