(Bloomberg) -- Kenya's central bank governor said the market shouldn't worry about the local currency's weakening in the past few weeks, and that record foreign reserves give him ample room to intervene.
The shilling has weakened 0.6% against the dollar month to date, according to data compiled by Bloomberg. That's almost wiped out the unit's gains this year. The currency was little-changed at 101.9 per dollar by 2:05 p.m in Nairobi.
Kenya's currency is closely watched after the International Monetary Fund last year said the unit is overvalued by 17.5%, an assessment that Governor Patrick Njoroge said was arrived at with errors. The East African nation operates a flexible exchange rate regime and the central bank only intervenes to minimize volatility, he said.
“We need to be more relaxed,” Njoroge told reporters Thursday. “We are focusing on little movements,” yet they don't mean much in the “big scheme of things,” Njoroge said.
Njoroge attributed the recent weakening of the shilling to increased demand for foreign currency to import petroleum products, and said that central bank isn't worried partly because foreign reserves are at a record $10.6 billion.
“We have the firepower to deal with any eventualities,” he said.
--With assistance from Eric Ombok.
To contact the reporter on this story: David Herbling in Nairobi at dherbling@bloomberg.net
To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Ana Monteiro
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