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Central Bank sets ceiling on foreign exchange rates

24 July 2015, 19:51

Nairobi - Kenya's central bank set the minimum size for foreign exchange transactions on the interbank market at $500,000 and asked banks to maintain a maximum spread of 0.20 shillings ($0.0020) on quotes.

The bank said last week it was taking measures to eliminate "disorderly market developments" after the shilling sank to new 3 1/2-year lows against the dollar, forcing policymakers to jack up lending rates.

Earlier this week, it asked banks not to exceed the set maximum exposure to foreign exchange of 10 percent of core capital, at any time during the day.

The directive on exposure split traders on its likely impact, with some saying it would curb their ability to handle large transactions, others that it would not.

The latest measures on a minimum transaction and a maximum spread were contained in a circular to commercial banks dated July 23 and seen by Reuters on Friday.

One trader said setting the minimum size at $500,000 might constrain smaller banks from taking positions.

Policymakers will meet on Aug. 5 to set rates, a month ahead of schedule.

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- Reuters


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