Weak shilling: Kenya goes for affordable option to pay off external debts
Weaker currency poses threat to the country’s efforts to increase offshore borrowing. PHOTO | FILE
Kenya is considering entering into contracts with both local and foreign banks to buy dollars at agreed prices in order to pay its external debts in the wake of a weakening shilling and higher interest rates.
National Treasury Cabinet Secretary Henry Rotich said technocrats were thinking of signing contracts with banks to pay the loans, which are denominated in dollars, whose repayment price largely hinges on changes in the exchange rate. This is technically referred to as hedging.
