RUTO moves to protect oil cartels as he hails the G-to-G oil deal with Saudi companies for stabilizing the shilling - See what Treasury CS said?

 Sunday, January 21, 2024 – The Government of President William Ruto has absolved Gulf-based oil tycoons from the current depreciation of the Kenyan Shilling against the dollar. 

In a statement, Treasury Cabinet Secretary (CS) Njuguna Ndung’u stated that the government-to-government (G-to-G) oil deal between Kenya and three Middle Eastern countries was not to blame for the weak Shilling currently exchanging at 161 against the dollar. 

CS Ndung’u remarked that the G-to-G instead should be hailed for ensuring that the country did not find itself in an economic crisis. 

“The depreciation of the Kenya Shilling as witnessed in the recent past is a result of market fundamentals and not driven by the G-to-G arrangement,” Ndungu explained. 

Market fundamentals are arrived at by analysing the real fair market value of a stock or currency. 

As such, the market fundamental (fair valuation) of an asset is the discounted present value of the stream of future cash flows attached to the asset.

Former President Uhuru Kenyatta’s administration has been accused by the current regime of artificially strengthening the Shilling instead of letting market forces determine its value. 

Through propping, Uhuru’s government was accused of creating an artificial demand for shillings by using foreign exchange reserves to buy the local currency. 

According to Ndung’u, there was a looming economic shutdown in 2023 as the policies by the former administration created US dollar (USD) liquidity problems. 

With the Kenyan economic market stabilised and foreign exchange market pressures handled, Kenya will exit from the oil deal in December 2024.


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