Central Bank of Kenya's Monetary Policy Committee (MPC) convenes today for a closely watched meeting, with the fallout from a 10 per cent reciprocal tariff imposed by the Trump administration on Kenyan goods over claims of currency manipulation dominating discussions on the foreign exchange market.
The MPC, chaired by CBK Governor Kamau Thugge, will weigh various economic factors to determine its monetary policy stance aimed at maintaining price and macroeconomic stability. However, the shadow of Washington's tariff and the accompanying renewed allegations of currency manipulation hang heavy over the deliberations. On April 2, Trump announced a blanket 10 per cent tariff on all goods going into the US.
He also added new duties on goods from 185 countries including Kenya which the president described as the "worst offenders" in terms of perceived unfairness on trade, slated to kick in on April 9.
Among the reasons the US cited when it hit different countries with the tariffs included currency manipulation. Washington has repeatedly stressed the need for Kenya to "avoid manipulating exchange rates," a pre-condition for any future trade agreement. Trump's administration last week renewed these concerns, alongside trade imbalances, to justify the tariffs. "The Secretary of the Treasury is required to assess the policies and practices of major US trading partners with respect to the rate of exchange between their currencies and the United States dollar pursuant to section 4421 of title 19, United States Code, and section 5305 of title 22, United States Code," said a brief from the White House. "The Department of the Treasury will strengthen its ongoing currency analysis and address the lack of transparency by foreign governments in currency markets." The US administration first raised concerns about Kenya's currency practices during Trump's initial term in 2020.
