NAIROBI, March 22 (Reuters) – Kenya’s government is working with the central bank to revive the interbank foreign exchange market, President William Ruto of the East African country said on Wednesday.
The interbank market for hard currency has turned dormant in recent years, due to what traders said was aggressive policing by the central bank, which made it difficult to do deals.
Central bank Governor Patrick Njoroge has repeatedly denied undue interference in the market, saying the regulator was merely playing its role of enforcing discipline.
“We, through the central bank of Kenya, are having conversations to reinstate the interbank foreign exchange market,” Ruto told an event at the securities exchange.
The lack of a vibrant interbank foreign exchange market has partly been blamed for a biting shortage of hard currency that has even forced the government to seek longer credit periods for essential imports like petrol.
It has also given rise to a parallel market, with money-changers quoting a different foreign exchange rate to the official central bank one, with a divergence of about 10%.
Reporting by Duncan Miriri; Editing by William Maclean nand Richard Chang
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