Kamau Thugge, Kenya’s Central bank governor on Wednesday came out to say the country would repay a $ 2 billion International bond that will be ready in June. He said this would help the currency gain value.
All eyes are on the country to know whether it can be possible amidst the country’s growing debt, the low in the currency and doubts surrounding its financial markets.
Thugge said at a news conference that the funds from the World Bank and other foreign banks are enough to satisfy the bond.
He went further saying that the shilling is falling short of the Dollar and he thinks the risk of the Eurobond will be eliminated when the repayment is done and that would strengthen the currency going forward. He said this in the light of the Central Bank increasing its lending rate.
This risk of the Eurobond will in my view be completely eliminated. And that should also contribute to a strengthening of the shilling year.
It is my view now that the exchange rate has overshot the equilibrium rate. So there could be scope for central bank to support the exchange rate going forward,
Thugge said
Previously, the Bank had said it only intervened in the shilling volatility and that it had no constant rate for the currency.
In addition, he said the currency might be supported by foreign loans with high rates of interest.
The Central Bank governor said the country got $ 1 billion in expenditure over the last two months and would likely get a surplus of $1.5 billion from the World Bank by the second quarter of the year.
last year December, the Central Bank prediction of 2024 was 5.9%, adding that this year’s economic prediction is 0.1% higher than last year’s.
