Central Bank of Kenya Governor Kamau Thugge stated that U.S. aid cuts will not adversely affect Kenya’s dollar reserves or exchange rate, which remain stable due to strong remittances and current account dynamics. Although the aid freeze raises budgetary concerns, Kenya is expected to adapt through increased domestic revenue and international partnerships.
Kamau Thugge, the Governor of the Central Bank of Kenya, assured that cuts to U.S. foreign aid under Donald Trump will not negatively impact Kenya’s dollar reserves or exchange rate. In a recent press briefing, Thugge noted that the local currency’s stability is predominantly influenced by factors beyond aid, such as current account developments and strong remittance inflows.
Kenya has historically relied on significant U.S. foreign aid for various sectors, including healthcare, security, and education. Recently, the U.S. announced a freeze on some assistance to Kenya due to governance concerns, leading to worries over future budget constraints. Economic analysts suggest that, although immediate effects on the forex market may be minimal, long-term impacts could affect budget allocations.
Thugge remains optimistic about the resilience of Kenya’s currency and foreign reserves, citing ongoing support from remittances. He emphasized that other economic factors will dictate exchange rate fluctuations. Despite the aid freeze, Kenya appears positioned to manage its financial needs through alternative funding sources and strong diaspora support.
Original Source: www.capitalfm.co.ke
