Banks wait for direction on trading Kenyan new currency
Banks in Uganda and other currency traders are awaiting directions on how they can proceed to trade Kenyan new currency notes.
Kenya’s old Shs1,000 note stopped being legal tender on September 30, 2019 and anyone who has it around the world will not be able to change it thereafter. There is no deadline on the return of old KShs50, KShs 100 and KShs 200.
Mr Peter Mbowa, the head of treasury at Barclays bank (absa) Uganda, said they had not started trading in new notes. He said the only trading of Kenyan shillings has been electronic and banks are reluctant to trade cash.
Bank of Uganda (BoU) and Central Bank of Kenya (CBK) will have to pronounce themselves on how banks and forex bureaus can proceed going forward.
On the side of forex bureaus, the trading of cash has been on but slow. The bureaus would take cash by themselves in Kenya for changing. According to some players, the uptake of new Kenyan notes remains low.
Mr Stephen Kaboyo, the managing director of Alpha Capital said people are asking for the US dollars in the place of Kenya shillings in a show of lack of certainty of what is going on.
He said: “There is a confidence issue. In spite of all assurances, many still prefer to hold US dollars even when transacting in Kenya. It is going to take some time before confidence is restored.”
However, Ugandans trading the Kenyan currency have said there was no panic as the deadline for handing the old 1,000 Kenyan shillings passed Monday evening.
Mr Mbowa said the central bank gave them a window and they were able to hand in all the old notes they still had.
An analyst at one of the banks said investors hate uncertainty and if they aren't certain of central banks future actions, they stay away from the currency – that is what happened with the Kenyan shilling.
The KShs1000 note is the highest currency bill in Kenyan currency but also used to transfer and launder huge amounts of cash by the corrupt, money launders and counterfeit kings.
Kenya recalled the old notes after it claimed a lot of cash was in the hands of wrong elements and it had been gotten corruptly. Most of it was being hidden under the beds and outside the country.
Dr Adam Mugume, the BoU Executive Director for Research, said in June that Uganda had shipped KShs74.4m (about Shs2.6bn) when Kenya asked neighbouring countries to stop trading the currency.
However, according to Mr Mugume, forex bureaus were still holding more Kenyan notes.
