(Bloomberg) -- A Kenyan bankers group said it's in talks with the regulator to ensure the market is supplied with dollars, blaming shortages of the U.S. currency on strong demand from companies remitting dividends and manufacturers importing components.
The Kenya Bankers Association also denied a local newspaper report that the central bank had directed lenders to ration dollars, the lobbying group said in a statement.
“The industry is in constant discussion with the central bank to ensure that the current imbalances are addressed as quickly as possible to bring the market back to normalcy,” the KBA said. “The supply of foreign currency continues to grow, supported by receipts from the country's main exports and strong remittances inflows.”
READ: Kenya Eurobond Yields Pare Gains as Traders Deny Dollar Order
The shilling posted its lowest intraday level of 116.04 to the dollar on Tuesday, according to data compiled by Bloomberg.
Already hit by a sharp rise in global commodity prices and Russia's invasion of Ukraine, Kenya's external accounts are also under pressure as dollar inflows from traditional sources such as agricultural exports and tourism fail to keep up with demand, EFG Hermes Kenya Ltd. said in an April 26 note. The brokerage sees the local currency weakening to 122-123 shillings per dollar by the end of 2022.
“We see the downward pressure, which comes after three years of marked stability, emanating primarily from rising external pressures given the imbalance in the global economy,” EFG Hermes said.
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