The biting dollar shortage has eased following the revival of the interbank currency market on orders from the State House.
Bulk buyers of dollars have witnessed increased availability of the greenback in recent days, a marked departure from market conditions that saw banks run out of the US currency on some days as others imposed a daily cap on dollar purchases of as little as $5,000.
The changes followed a directive from President William Ruto on March 22 for the revival of the interbank foreign exchange market in an effort to remove distortions in the market that had exacerbated the shortage of foreign exchange.
The interbank market for hard currency has turned dormant in recent years, due to what traders said was aggressive policing by the central bank, which made it difficult to do deals.
The lack of a vibrant interbank foreign exchange market has partly been blamed for a biting shortage of hard currency that has even forced the government to seek longer credit periods for essential imports like petrol.
It has also given rise to a parallel market, with money-changers quoting a different foreign exchange rate to the official central bank one, with a divergence of over Sh10 per dollar.
Now, the spread between the official and open market rates has narrowed to an average of Sh6 per unit from Sh13 in early March.
