The National Treasury PS Julius Muia has said that the current dollar shortage in the market is just but an artificial creation by players in the forex exchange market.
Muia was speaking on Monday during a meeting he held with manufacturers in the country where he said the dollar shortage results from stockpiling of hard currency by manufacturers who have been operating in fear of an imminent Foreign Exchange crunch.
“Sometimes it's just sentiment that causes a problem and that’s what I told manufacturers yesterday. If they work on the premise that there's a shortage of dollars and start accumulating hard currency more than they require, that creates an artificial shortage which doesn’t reflect the reality on the ground,” Muia said.
Muia affirmed that there is a sufficient supply of the dollar to cover five months of imports, as reflected by the Central Bank of Kenya (CBK).
“We have over five months of cover for imports and so there shouldn’t be a problem in terms of the availability of hard currency,” Muia said.
According to CBK, the foreign exchange reserve rose by Sh4.9 billion to Sh960.8 billion from the previous week.
That translates into 4.89 months in terms of the country’s import demand.
CBK Governor Patrick Njoroge recently denounced claims that there was a dollar shortage and said the claims were ill-founded.
Njoroge said the demand for dollars hiked about two months ago but has since normalised.
“For a sector importing goods worth between $90 and $100 million monthly, the figure is nowhere near the $2 billion we are putting out there,” Njoroge said.
“Such players should understand that they are small in that sense and should go to market like anyone else. There are no favourites in the market. Follow the rules of the market and everything will be okay. It is interesting that some of the people writing to us don’t have positions and are not in the market, they are traders.”
On such claims, Kenyan cooking oil manufacturer Pwani Oil Products Limited announced that it is temporarily suspending operations at its refinery in Kilifi.
“Locally, the situation has been compounded by challenges faced by manufacturers in accessing US dollars used in paying for imports of crucial raw materials,” Pwani Oil said.