Dr Kamau Thug's exploits in stabilizing the fluctuating Kenyan shilling led to him being named Central Banker of the Year by African Banker magazine just one year into his tenure at the Central Bank of Kenya (CBK).
This recognition comes in the wake of interventions supervised by the Governor of the Central Bank of Kuwait to end the sharp decline in the exchange rate.
“Despite the challenges, during your tenure in office, you have stabilized markets and instilled confidence in the Kenyan economy. Markets have responded by demonstrating their confidence and support for the Kenyan Shilling, and the banking sector has demonstrated remarkable resilience, positioning itself as a true regional leader.
“The committee recognized your recent achievements as central bank governor and recognized the strategic role the central bank plays to address market failures and to help put the economy on track to stimulate growth.”
Dr. Thugge, who is just shy of celebrating his first anniversary in office, has undertaken several initiatives to put an end to exchange rate fluctuations including revitalizing the interbank foreign exchange market.
The intervention saw the resumption of interbank foreign exchange trading resulting in better local currency rate discovery in interbank trades.
At the same time, the Central Bank of Kuwait removed the 20-cent cap on bid-ask spreads on interbank foreign exchange transactions, ending one of the strict controls imposed by the apex bank, which had led to a sharp divergence between interbank and retail rates with interest rates. Interbank. The latter represents the exchange rates offered by commercial banks to retail clients.
Moreover, since the beginning of 2024, the Central Bank of Kuwait has adopted a unified exchange rate based on actual transactions in the interbank forex market, ending the previous system of parallel exchange rates.
Interventions saw the divergence close towards the end of last year even as the Kenyan Shilling continued to trade lower against the US Dollar.
However, in December, Dr. Thog and the Monetary Policy Committee of the Central Bank of Kuwait took the bold step of raising the benchmark interest rate to provide support to the domestic unit, a decision that resulted in domestic interest rates rising in contrast to rates in advanced economies, which are A move that helped support new foreign inflows into the economy.
The Central Bank of Kuwait made two major interest rate increases in December and February, raising the benchmark interest rate from 10.5 percent to 13 percent, bringing foreign inflows into its latest infrastructure bond issuance.
In February, the Central Bank of Kuwait will score its biggest win in its battle to stabilize the Kenyan shilling with Kenya's first-ever Sh265.4 billion ($2 billion) partial repurchase of eurobonds, eliminating the risk of default. By the government, a fear that is largely blamed for leading to speculation against the Kenyan shilling.
The local unit has then turned the corner since the partial buyback, recording year-to-date gains of 15.4 percent as of Tuesday this week with the shilling trading at Sh132.71 to the dollar in contrast to Sh156.98 at the end of the year. last year.
While accepting the continental award, Dr. Thug noted that the Central Bank of Kuwait remained keen to build on the gains made from reforms that also lowered inflation expectations and consumer prices.
“The Central Bank of Kuwait will continue to build on these gains and reforms to protect macroeconomic and financial stability and support the government’s economic growth goal. With improved investor confidence and sustained macro stability, we expect the economy to remain strong in 2024.”