Bloomberg News

Kenyan Lawmakers to Debate Ndung’u Role in Shilling Decline

March 01, 2012

Kenyan lawmakers will today begin debating a report by a parliamentary committee that recommends central bank Governor Njuguna Ndung’u step down for his handling of the shilling’s decline last year.

“We will table the report and expect members of parliament to debate it and make a decision,” Adan Keynan, chairman of the committee, said in a phone interview today from Nairobi, the capital.

A panel of lawmakers presented a report to parliament last month recommending that Ndung’u step aside and allow a tribunal, to be appointed by President Mwai Kibaki, to determine whether the governor’s actions led to the shilling’s 20 percent plunge in the first nine months of last year.

The shilling fell to a record low of 106.75 per dollar in October as inflation surged to 19.7 percent amid higher fuel costs and the worst-regional regional drought in six decades that pushed up food prices.

The Central Bank of Kenya has moved to help stem the shilling’s fall by increasing its key lending rate by 11 percentage points since October to a record 18 percent, raising reserve requirements for banks, and mopping up shilling liquidity through repurchase agreements.

The shilling declined for a fifth consecutive day and was trading 0.1 percent weaker at 83.12 per dollar by 9:42 a.m. in Nairobi.

Ndungu’u wasn’t immediately available for comment, Nancy Sang, a spokeswoman for the central bank, said by phone today.

To contact the reporter on this story: Johnstone Ole Turana in Nairobi at jturana@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net


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