NAIROBI, March 24 (Reuters) - Some of the Kenyan shilling’s recent weakening was caused by market misunderstanding of the central bank’s plan to boost its reserved by buying dollars from the market, and some “malicious actors”, central bank governor Patrick Njoroge said on Tuesday.
The shilling is hovering close to its record low of 106.70 per dollar, mainly due to the strengthening of the dollar and concerns about the impact of the coronavirus on Kenya’s export earnings.
Njoroge, however, attributed some of the weakening to traders who did not understand the central bank’s offer of buying $100 million a month for four months to shore up reserves, which was announced on March 3.
He also accused unnamed traders, or “malicious actors”, of contributing to the weakening through indiscipline.
“Unfortunately, we are not saved of that scourge,” he told a live-streamed news conference.
Policymakers cut rates by a larger than expected 100 basis points on Monday, and reduced the amount of cash commercial banks are required to hold, to stave off the potential impact of the coronavirus outbreak on the economy.
Njoroge said they will also triple the length of repurchase agreements they enter with banks to 90 days from the current 28, in order to further boost liquidity in the financial sector.
“They can bring in their Treasury bills and we can enter repurchase agreements with them all the way to 90 days,” he said.
Reporting by Duncan Miriri; Editing by Ed Osmond