Moses Kuria, Cabinet Secretary for Public Service, Performance, and Delivery Management, entered the debate about strengthening the Kenyan shilling relative to the US dollar.
The former Trade CS stated on Wednesday night's JKLive Show on Citizen TV that the Kenyan market is favored with minimal local input because global market principles are inherently stabilizing.
Kuria also refuted theories that the sudden increase in the value of the shilling from roughly 160 to 140 was caused by the Kwanza regime in Kenya, stating that the shilling was only naturally adjusting to the international market after all other conditions had been met.
The CS claims that market speculation, hoarding, growing Eurobond loans, and the debt crisis the government and Central Bank of Kenya are currently addressing were the causes of the shilling's ascent.
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"There is nothing we have done fundamentally in one week, it is only that the market fundamentals are right. We promised Kenyans that we would not lie to them, ours would just be to tell the truth…the economy is rebounding on its own," he explained.
"Things are looking up not because of a story, but because figures are telling us that and science is right."
Kuria claims that the recent Eurobond repayment impacted the shilling's increase because it stabilized the market and reduced the debt issue.
He clarified that most people had speculated that the government would eventually need dollars to settle the Eurobond, which caused people to hoard dollars domestically and cause the value of the shilling to decline.
"The Eurobond is not due but it was important to pay off so that it calms the market. People were speculating; they were saying that the government would come and mop up all the dollars that were there in the market to pay off the Eurobond, so people began to hold on to dollars so that they could cash out when the government came to mop up the dollars to pay the Eurobond," he stated.
"It sends a message to the speculators that we are not going to do that..so those guys have been forced to offload them hence why shilling is taking its shape."
Kuria praised the administration of President William Ruto for emphasizing the repayment of Eurobonds and the CBK governor's decision to be transparent about the state of the nation's economy.
According to CS Kuria, the current government is dedicated to allowing the shilling to stabilize naturally by creating a favorable market, much as CBK Governor Kamau Thugge had stated that the shilling was "artificially supported when at the same time it was weakening" during the previous regime.
"The speculations came at a time when the new governor of CBK, Dr Kamu Thuge, decided to say that we were artificially supporting the shilling so that we live in the illusion that we were doing well when we were not doing well," said Kuria.
"Just like we agreed on unga, fuel…we also said that if it is weak, let it be weak, no point of makeup, so the makeup fell off and we allowed the shilling to stabilize."
"The shilling was up because of speculation, now it is finding its true value. That is the good thing about not fixing the exchange rate artificially. Once speculations end, fundamentals take over. Now the true value of shilling is going to be realized."
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