KAMPALA – Commercial banks and forex bureaus in Uganda are in the dark over how to handle the new currency notes introduced by Kenya.
Central Bank of Kenya (CBK) has introduced a new 1,000 note effective October 1, implying that it no one around the world can change it or use it in any transaction.
Mr Stephen Kaboyo, the managing director of Alpha Capital, said many traders are opting for the US dollars in the place of Kenya shillings.
“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,” he said.
Mr Peter Mbowa, the head of treasury at Barclays bank (absa) Uganda, said the only trading of Kenyan shillings has been electronic and banks are reluctant to trade cash.
On the side of forex bureaus, the trading of cash has been on but also slow. The bureaus would take cash by themselves in Kenya for changing. According to some players, the uptake of new Kenyan notes remains low.
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 1000 Kenya Shilling 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.
Bank of Uganda Executive Director for Research Dr. Adam Mugume, said in June that Uganda had shipped Kenya shilling 74.4m (Uganda shillings 2.6bn) when Kenya asked neighbouring countries to stop trading the currency.
However, according to Mugume, forex bureaus were still holding more Kenyan notes.