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Kenya Urged to Issue Offshore Shilling Debt to Bolster Currency
NAIROBI (Capital Markets in Africa) – Kenya should issue local-currency debt outside the country to check depreciation of the shilling, rather than managing the unit, its Capital Markets Authority said.
The International Monetary Fund reclassified the shilling from “floating” to “other managed arrangement” in October to reflect the currency’s limited movement due to periodic central bank interventions, saying the unit was overvalued by about 17.5 percent.
“There are opportunities for Kenya to consider adopting alternative and complimentary measures,” the CMA said in a report. “That is, raising capital in local currency, both in onshore markets where governments can tap local institutional investors and in offshore markets where they have greater access to a global investor base to curb a likely depreciation of the Kenya shilling.”
The shilling was Africa’s best performing currency last year, having gained 1.2 percent against the dollar, according to data compiled by Bloomberg.
Source: Bloomberg Business News