House raises concern over weak dollar

• MPs argue that the falling value of the dollar was due to deliberate policies of the Obama Administration.

The falling price of the US dollar has raised concern among MPs that Kenya's foreign currency reserves are at risk.

Githunguri MP Njoroge Baiya (PNU) and Rangwe MP Martin Ogindo (ODM) Wednesday put the government on the spot over the depreciating value of the dollar, the primary unit in the foreign currency reserves.

The MPs argued that the falling value of the dollar was due to deliberate policies of the Obama Administration.

Therefore, they said, Kenya had to take steps to protect its foreign currency reserves by avoiding the dollar.

Mr Baiya said a 15 percent drop in value of the US dollar over the past eight months had placed the government’s coffers at great risk.

It is not clear how much money has been lost in debt repayment, although assistant Finance minister Oburu Oginga played down the losses saying debt repayment is done in instalments.

Dr Oginga said the weakening of the dollar, really, the strengthening on the Kenyan shilling, was because the shilling was “correcting” its value to where it was before the global economic crisis set in.

“There are no specific risks facing the country as a result of the decline in value of the US dollar,” the Assistant minister said.

He said the Central Bank was “closely monitoring” the prices to cushion the country from any severe economic shocks.

Dr Oginga assured the two MPs that the foreign currency reserves "did not have any single currency."

Ordinarily, the fluctuation of currency prices is usually contained with governments opting to buy gold or closely keep tabs on currency exchange trade and keep the most valuable currency.

In the short-term, Dr Oginga said, the low dollar prices will “moderate rising international oil prices and reduce the cost of imported inputs, both of which are crucial to the economic recovery process.”

The decline in value of the US dollar will reduce the earnings of the exporters while the importers will reap big time, he noted.