Kenya’s central bank governor, Patrick Njoroge says that he is not concerned by this month’s drop in the shilling’s value explaining that the weakness is not linked to plans around the old 1,000 shilling note.
The bank announced on June 1 that it will retire the old version of its biggest legal tender in four months time, as part of a push to fight illicit financial flows, money laundering and counterfeiting.
Related: To tackle financial crime, Kenya is withdrawing its old 1,000 shilling version
Since then, the currency has lost a percentage point to touch an intra-day low of 102.00 per dollar on Monday, before paring back some of the losses to trade at 101.65/85 on Thursday.
Some traders attributed the move to people with big stockpiles of old 1,000 shilling notes converting them into hard currency on the commercial market before they become worthless on the October 1 deadline.
Anyone wanting to exchange large numbers of the old notes for new Kenyan shilling bills has to prove its source. The main reason for the planned action is to cut down on graft and capital flight.
Kenya is favoured by foreign investors mainly due to its diverse, fast-growing economy.