Narok Senator Ledama Olekina has slammed Central Bank of Kenya Governor Kamau Thugge after he said the Kenyan Shilling is overvalued by 20 percent.
Ledama in a statement via his X account on Wednesday said the Kenyan economy is industrious and the shilling is no longer soft. currency but a hard one
‘Only a brainwashed and a mad man would say our currency has been overvalued! Stop this slave mentality towards the Bretton Woods Institution. Our economy is industrious and our Ksh is no longer a soft currency but a hard currency in the region. Wake up and smell the coffee,” said Ledama.
Thugge while appearing before the National Assembly’s Finance and National Planning Committee on Tuesday said that Kenya has maintained an “artificially strong” shilling for the past six years due to overvaluation.
He explained that the international monetary institutions raised alarm over the inflated exchange rate of the Kenyan shilling more than six years ago.
“On the issue of the exchange rate, I think we’ve had an overvalued exchange rate for a number of years now, in fact if you go back six years ago there was a raging debate as to whether the exchange rate of the Kenyan shilling was overvalued and at that time the Bretton Woods institutions, the IMF, the World Bank felt that the exchange rate was actually overvalued by between 20% and 25%,” he said.
According to the CBK Governor the overvaluation became apparent last year when the world’s advanced economies went through a period of expansionary monetary policy.
“The US raised interest rates by 500 basis points in a very short period of time and very aggressively, but our central bank did not raise interest rates commensurately and so there were capital outflows…and that affected the exchange rate and because there was already an overvaluation, perhaps our currency depreciated a bit more than, for example, the currencies in the region,” he added.