Consumers and traders have hit out at government over failure to counter the Shilling from a massive slide even as monetary policy committee (MPC) meeting adjusts Central bank Rate (CBR) by another 1.5 percent to 11.50 percent.
Consumer federation of Kenya (Cofek) said in that Central bank of Kenya (CBK) was not doing enough and is ill-prepared to tackle the free falling shilling against major international currencies.
Cofek secretary General, Stephen Mutoro, said there was more to be done by government apart from revising the CBR rates to ensure it lives up to its promise to lower cost of basic commodities.
“President should use extra-ordinary measure to protect the shilling from further beating. He should not allow consumers to be punished with high commodity prices,” said Mutoro.
Kenya Association of Hotel Keepers (KAHC)-Nairobi, chief executive, Mike Macharia said while a strong dollar would interest more visitors in the short term, the industry stood to loose out on impending rise in fuel and transport costs.
The shilling weakened sharply on Monday largely hurt by the global markets and worries over Kenya’s widening current accounts deficit.
Traders reported incidences of panic buying especially by importers after the shilling hit the psychological mark on Monday due to increased imports as exports thinned out.
CBK has consistently assured of enough cash reserves to shield the currency against turbulence, but the market is now seemingly tuned to a panic mode seen last in 2007 when the shilling hit Sh 107 against the dollar.
On tuesday the commercial banks regulator said it sought to mop up Sh 12 billion in the market to make it more costly to hoard dollar even as banks are said to be taking advantage of the circumstance to hold the foreign currency.
Central Bank of Kenya (CBK) governor Patrick Njoroge in his first meeting since he was appointed also introduced a three-day buy-back on fixed income securities and reviewed upwards Kenya Banks’ Reference Rate (KBRR) to 9.87 from 8.54 percent in January.
It signaled higher lending rates for home and personal loans over the coming month.
He said the measures would tighten liquidity in the market as the regulator commits to closely monitor liquidity conditions in the market.