Economics
IMF Using Kenya as FX Formula ‘Guinea Pig,’ Governor Says
- Lender’s assessment of shilling value is flawed, governor says
- Currency is overvalued by less than 5% against dollar, he says
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Kenya’s central bank reiterated that it only intervenes in the foreign-exchange market to minimize volatility, criticizing an International Monetary Fund assessment that the shilling is highly overvalued and the unit is no longer floating.
The shilling is overvalued by less than 5 percent against the dollar, Governor Patrick Njoroge said. That compared with the IMF’s assessment of 17 percent. The lender used a new methodology that’s only been in place since 2015 to reach that conclusion, Njoroge said. The formula was created for advanced economies and only now being applied to emerging markets despite its “well-known” weaknesses, he said.