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President William Ruto was speaking during the Listing of Laptrust Imara (REIT) at the Nairobi Securities Exchange on Wednesday, March 22, when he said that the government would clamp down on runaway currency exchange rates.
He said that apart from the recent deal allowing the government to purchase fuel on credit, to reduce the demand for the greenback, his administration would tame forex brokers.
The head of state explained that the deal would eliminate the demand for about $500 million (Sh65 billion) every month.
“For the people who work numbers, I am giving you free advice that those of you who are hoarding dollars… you shortly might go into losses,” President Ruto said.
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“Through the Central Bank, we are having conversations to reinstate the interbank exchange market that has since not worked. I am happy that the players in that sector including our banks are participating,” he added.
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Reinstating the interbank exchange market means re-establishing a system where banks and financial institutions can trade currencies with each other.
This will enable banks to access foreign currencies easily and at more favourable rates, thereby reducing their transaction costs.
READ: Kenyan businesses struggle as banks run out of US dollars
Ruto noted that the government had allowed the forex market to be distorted by brokers, whom he also blamed for the crisis.
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Due to the shortage of US currency, the spread between the official and open market rates had increased, resulting in a record-breaking price of Sh145 per unit when purchasing dollars from banking halls and forex bureaus.
This led to the emergence of a black market for the US currency.
The head of state said the measures put in place would begin to manifest in weeks.