President William Ruto has assured to fix the dollar shortage in Kenya.
Kenya has a shortage of dollars. A dollar shortage happens when a country’s net outflows of USD outweigh its net inflows.
This can happen when it has to pay more USD for its imports than it receives for its exports or when its international dollar obligations are higher.
Most fuel and oil importers claim they cannot import the commodities because of the dip in the supply of foreign currency.
Kenya’s oil and fuel importers use US dollars to buy fuel, the forex shortage has had a direct impact on the country’s fuel supplies.
This has led to fuel shortages in major places around the country, especially in Nairobi. The shortage has also impacted essential imports such as medicine and food.
The cause of the dollar shortages has been attributed to various factors; declining exports, high import bills and reduced remittances,. leading to some firms seeking foreign currency in neighboring Tanzania.
Kenya’s declining forex reserves have also put the Kenyan shilling under intense pressure against other major currencies.
The government however, says there is no cause for alarm, saying there are still enough reserves of hard currency. But the Central Bank of Kenya has directed commercial banks to ration dollars to protect reserves.
Ruto said his administration has undertaken innovative strategies to ease the burden of the availability of dollars in the market.
He has assured business people that with the set market-driven strategies, the shortage should be fixed in a matter of weeks.
He said that they already have an agreement that will see Kenyans access fuel on a deferred six-month credit, easing demand for about 500 million dollars every month from this market.
President Ruto said that through the Central Bank of Kenya, they are having a conversation to reinstate the Interbank Exchange Market which has not been operational.
Players in the sector like banks, will take charge of the dollar market and take brokers out of the equation.
BY NKATHA WAINAINA