The Central Bank of Kenya (CBK) on Wednesday issued guidelines for foreign exchange trading to commercial banks as the East African nation grapples with dwindling forex reserves.
The apex bank in a press statement released in Nairobi, the capital of Kenya, said that the Foreign Exchange Code (FX Code) aims to strengthen and promote integrity in the wholesale foreign currency market in Kenya.
“It will facilitate better functioning of the market, reinforcing Kenya’s flexible exchange rate regime for greater resilience of the economy,” the CBK said. “Commercial banks will be expected to adhere to six principles under the code, among them professionalism while trading in the foreign exchange market, timely settlement of foreign currency transactions, and exercising due care when negotiating for transactions.”
The guidelines come at a time Kenya’s forex exchange reserves have declined significantly to stand at just about 6 billion U.S. dollars, an equivalent of 3.6 months of import cover, a new low.
Some commercial banks in Kenya have been accused of hoarding dollars or selling at extremely high prices, destabilizing the foreign exchange market.
The Kenya shilling has declined against the dollar to trade at 130, a historic low, with the fall partly blamed on low foreign exchange reserves.