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1+1=11 and how Kurianomics fooled our financial desks

In the media business we trust chameleons and snakes more than our politicians. Because scepticism is the hallmark of good journalism.

So, when there is this poorly mastered choir dubbed “All hail, the Kenyan shilling” came to town, we were dismayed when the soloist was the most trusted fellow in Kenya, the media.

Politicians have been the most quoted sources in stories on why Kenyans have been better off with this sudden surge of the local currency against the dollar.

“Public Service CS Moses Kuria now says that Kenyans who are hoarding dollars should sell them before it is too late,” The Star reported.

“With the actions that the President and Deputy President and our government have made, our economy has started to recover. The other day you saw the shilling, just one week after we finished paying the Eurobond terms, our shilling has gained Sh20 against the dollar and things are still happening. If you have hidden dollars in your home, please listen to someone who is telling the truth. Go sell the dollars today, otherwise you will find yourself in trouble.”

Kuria’s free financial advice, we were told came  “barely three days after Deputy President Rigathi Gachagua also advised Kenyans hoarding dollars to sell them immediately, saying all indications are that the shilling will continue gaining against the foreign currency in the coming days.”

Now, we shall not vouch for anyone that comes around claiming to be the sole purveyor of the truth. We can only remind ourselves of the old adage that if your mother says she cooks the best food in the village, sample your neighbours’ dishes before believing her.

But let’s read on: “On January 15, the shilling officially crossed 160-unit points against the US dollar, the lowest level on record. The Central Bank of Kenya blamed the depreciation of the shilling on the $2 billion (Sh300 billion) Eurobond.”

Very well. Let’s all raise our champagne glasses to the Kenyan shilling. But wait a minute – there was this small line lost in the middle of the reportage: “The depreciation made imports more expensive while at the same time pushing up Kenya’s debt.”

And a stronger Kenya shilling means the fellows that have always been waiting to flood our markets with everything from toothpicks to second-hand underwear now have a better chance to do this, right?

It also means that the fellows seeking to buy our exports will wake up to find them more expensive, right?

But how come the Kurianomics reporters did not tell us this?

Why did they not tell us that higher prices of our exports mean lower demand for our tourism, coffee and tea? Why did they not tell us that we are about to be swamped by all manner of imports?

But maybe we are wrong. We are not patriotic enough to sing our praises for the Kenyan shilling. But truth and facts are the most disloyal fellows. They demand proof.

So, we did what everyone who does not understand numbers does -we googled. What is the other side of a strong local currency versus the dollar? The answers came in fast and furious. But we will only quote the first one that jumped on the screen:

“An international traveler might harbour for a strong domestic currency because that would make travel to Europe inexpensive. But the downside is a strong currency can exert significant drag on the economy over the long term, as entire industries are rendered noncompetitive, and thousands of jobs are lost. While some might prefer a strong currency, a weak currency a can result in more economic benefits.”

“A strong domestic currency exerts drag on the economy, achieving the same result as a tighter monetary policy (higher interest rates).”

In a nutshell, the media messed up this strong-shilling story big time. We swallowed the strong Kenyan shilling versus weak dollar propaganda; this economic-political mumbo-jumbo. Na Mungu anatuona.

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