Kenya has refuted allegations of currency manipulation leveled by the Trump administration.
This is even as Nairobi acknowledges a potential $100 million (Sh12.9 billion ) hit to the country's export earnings from newly imposed US tariffs. Central Bank of Kenya (CBK) Governor Kamau Thugge, while speaking at a virtual press briefing on Wednesday following the Monetary Policy Committee (MPC) meeting, asserted that the CBK's interventions in the foreign exchange market were solely aimed at smoothing out volatility, not manipulating the shilling's exchange rate for trade advantage. "The shilling's exchange rate is determined by the forces of supply and demand, and all we have really tried to do is to avoid fluctuation and volatility," Dr Thugge stated, defending the apex bank's currency management strategy. "I think our strategy has worked very well." His comments came in the wake of the Trump administration's decision to impose a 10 per cent tariff on Kenyan goods, citing concerns over alleged currency manipulation and trade imbalances.
The tariff, which took effect on Wednesday, has cast a long shadow over trade relations between Nairobi and Washington, particularly as the African Growth and Opportunity Act (AGOA) trade framework nears its September expiry.
The CBK governor revealed that preliminary assessments by the National Treasury indicate the tariff could reduce Kenya's exports to the US by approximately $100 million, equivalent to Sh12.9 billion. "We are working on the impact of the tariffs and what impact it is expected to have on our economy," Dr Thugge said. "In terms of our GDP, that $100 million would not have any significant impact on the overall balance of payments." Despite the trade headwinds, the CBK Governor painted a relatively stable picture of Kenya's external sector. "We've had very good performance in terms of exports; we've had good performance in terms of the current account deficit, which has been relatively steady," he noted, adding that the country had also witnessed "significant capital inflows." He emphasised that the CBK's policy had allowed for the building of international reserves to their highest level yet.
