© Reuters.
The Central Financial institution of Kenya (CBK) has imposed a restrict on the quantity of U.S. {dollars} that cash remittance companies can promote to prospects every day, in an try to manage the market amid declining foreign exchange reserves. The directive, which was carried out on Thursday, restricts these companies to transactions of a most of $100,000 per buyer per day. Any quantity exceeding this restrict should be processed by industrial banks.
Gerald Nyaoma, director of the Financial institution Supervision Division on the CBK, acknowledged that this measure goals to determine a good and orderly market and improve clear practices to enhance liquidity within the foreign exchange wholesale market. This motion follows observations of elevated participation from cash remittance companies within the foreign exchange wholesale market with out adherence to current pointers and requirements.
This restriction comes throughout a interval of depreciation for the Kenyan shilling, which has misplaced 20% in opposition to the greenback over the previous 12 months. On Thursday, the shilling stood at 147 in opposition to the greenback, marking a decline from 120 in September 2022. The falling worth of the shilling has been attributed partially to dwindling foreign exchange reserves, which had been reported as $7.05 billion or 3.81 months of import cowl on Sept. 8 by the apex financial institution.
Regardless of these figures being beneath the East African area’s requisite of 4.1 months of import cowl, the CBK maintains that the reserves are satisfactory.
The CBK’s new order targets Cash Remittance Suppliers (MRPs), with 20 establishments at the moment licensed underneath cash remittance laws to conduct such enterprise. As licensed sellers underneath the CBK act, these establishments are permitted to conduct overseas alternate (FX) enterprise.
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