By George Obulutsa
NAIROBI (Reuters) – Kenya’s central bank governor said on Thursday that bank officials did not see much effect on the exchange rate from U.S. President Donald Trump’s foreign aid freeze.
In late January, Trump placed a pause on most foreign development assistance pending assessments of efficiencies and consistency with his foreign policy.
Central Bank Governor Kamau Thugge cited strong remittance inflows among reasons why Kenya’s foreign exchange reserves were healthy at roughly $9 billion, or more than four months of import cover.
“We don’t see much impact on the exchange rate from the freeze on aid. We see our foreign exchange reserves remaining fairly strong, exchange rate stable,” he told a news conference.
On Wednesday, Finance Minister John Mbadi said Trump’s move to freeze aid could hit Kenya hard, as it lacks the fiscal space to replace the funding, adding that he hoped the United States would reconsider its decision.
Kenya’s shilling currency is broadly unchanged year-to-date against the dollar.
It closed 2024 up about 21% after a bond buyback eased concerns that the government could default.
On Wednesday, the central bank cut its main interest rate for the fourth meeting in a row, saying it wanted to do more to support lending and boost economic growth.
The Central Bank Rate was lowered by 50 basis points to 10.75%, in line with the forecast of a Reuters poll of four economists.
(Reporting by George Obulutsa; Editing by Alexander Winning, William Maclean)
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