Political sketch
Formerly the East Africa Protectorate and part of British East Africa. Independent from the United Kingdom on 12 December 1963.
The Kenya coastline for centuries had trading relations with Arabia. In the late 1880s, as part of the division of Africa into European spheres of influence, Germany and the United Kingdom recognized the claim of the sultan of Zanzibar to a stretch of the East African coastline and agreed to a division of the hinterland. The private British East Africa Association (later the Imperial British East Africa Company) made an agreement with the sultan for a 50-year concession of his territory on the mainland, subsequently amended to a perpetual concession. The resources of the company were inadequate to develop the territory and its hinterland, which included Uganda. The company became involved in a civil war in Uganda that was too expensive for it. The British government declared a protectorate over Buganda in 1894, and then, to have a line of communication with the coast, offered to buy the company's concession. The United Kingdom established the East Africa Protectorate on 1 July 1895; it became the crown colony of Kenya in 1920. Uganda had become a separate protectorate in June 1894. In 1948 the East African High Commission, whose headquarters was in Nairobi, was formed to administer certain services of common interest to Kenya, Tanzania, Uganda, and Zanzibar, such as communications.
The then governor of the East Africa Protectorate had invited white settlers in 1901. An unexpectedly large number came, settling especially in the agriculturally productive highlands, establishing coffee and other plantations. Natives pushed off the land frequently did not want to work on the plantations year round. To provide a workforce, forced labor was instituted, but it was forbidden soon after the First World War as a result of a public outcry in the United Kingdom. During the First World War Kenya was the base for the British attack on the neighboring German colony of Tanganyika; during the Second World War it was the base for the British attack on the neighboring Italian colony of Somalia and Italian-occupied Ethiopia. In the 1950s, the Kikuyu tribe instigated the Mau-Mau rebellion against the presence of whites. The British proclaimed a state of emergency. Kenya became independent on 12 December 1963, with a leader of the Mau-Mau rebellion, Jomo Kenyatta, becoming Kenya's first prime minister and later president. He ruled until his death on 22 August 1978. His successor, Daniel arap Moi, had the constitution amended in 1982 to make Kenya a one-party state. Multiparty elections were reintroduced in December 1992. Moi ruled in an autocratic and notoriously corrupt manner until 30 December 2002. However, his handpicked successor, Kenyatta's son, lost the presidential election. Coffee continues to be an important export, but fuel and manufactures are now more important. Nairobi remains the economic hub of East Africa.
Wars since 1500
Portuguese-Omani Wars in East Africa, 1652-1730; native revolt, 1906 (against United Kingdom); Second World War in East Africa, 1940-1941 (Italy against United Kingdom); Mau-Mau Uprising, 1952-1956 (Kenyans against United Kingdom).
Convertibility
The sterling area:
On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.
The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong had abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.
The East African Currency Board:
In 1921, Kenya, Tanganyika (now mainland Tanzania), and Uganda were switching from silver coins to the pound sterling as their anchor currency. At one point the market rate of the Indian silver rupee fell as low at 16 Indian rupees = UK£1, versus an official conversion rate of 10 Indian rupees = UK£1 in East Africa. To discourage arbitrage between the market rate of and the official rate, the East African Currency Board on 12 February 1921 limited to UK£35,000 a week the amount it would allow banks to remit through it to London. The limit excluded remittances for the account of colonial governments. The limit was removed perhaps after July 1921.
Kenya alone:
On 10 June 1965, Kenya applied to all sterling area countries, except Tanzania and Uganda, the exchange control treatment previously in force only for nonsterling countries. It extended controls to transactions with Tanzania and Uganda on 3 Mary 1970. Kenya, Tanzania, and Uganda all left the sterling area on 23 June 1972.
After establishing separate central banks, Kenya, Uganda, and Tanzania continued to cooperate monetarily in some ways. Until late 1971, the notes of any of the three countries could be exchanged without restriction in any commercial bank of the other states. Uganda suspended such convertibility of its notes in late 1971; Tanzania and Kenya soon followed, so that by early 1972 it was illegal to carry more than 100 shillings of each country's currency across national borders, nor did commercial banks in one country any longer exchange notes of the other two countries.
Other
The East African Currency Board gained much of its initial circulation in 1920 by exchanging its own notes and coins for Indian rupee coins. At the time, the rupee was floating against the pound sterling, which had in effect abandoned the gold standard when the First World War broke out in 1914. The price of silver, the metal of which the rupee was made, was at a high level against the pound sterling in 1920. The East African Currency Board had not secured a promise from the government of India about the exchange rate against the pound sterling at which India would redeem rupee coins. Between the time East African Currency Board notes and coins replaced Indian rupees and the time the currency board presented the rupees to the Indian government, the price of silver fell substantially. The board incurred similar losses replacing German East African silver rupees previously circulating in Tanganyika (now the mainland of Tanzania). As a result, the East African Currency Board began its existence with foreign reserves of less than 100%, although the board maintained 100% reserves at the margin and acted in an orthodox manner. In 1925, reserves were only 43.6% of the board's East African £5.61 million of notes and coins in circulation. During the worldwide depression that began in 1929, circulation fell, hitting a low of East African £3.57 million in 1932. Reserves fell even faster, to only 9.9% in 1932. Member governments extended a guarantee of East African £1.5 million to the board to borrow pounds sterling if necessary, but the board never used the guarantee because its reserves soon began to increase as prosperity returned. Circulation increased substantially during the Second World War as British victories over Italian forces in Eritrea, Ethiopia, and Somalia resulted in the East African shilling replacing the Italian lira as currency. The foreign reserves of the currency board first reached 100% in 1950, which was also the first year the board made payments of seigniorage to member governments. (This information comes from various issues of the East African Currency Board's annual report.)
After establishing national currencies to replace the East African shilling in 1966, the Kenyan, Tanzanian, and Ugandan shillings continued to be equal, except for a few brief periods, until 20 January 1979, when Tanzania devalued and definitively ended the tradition of the successor currencies moving in lockstep.
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): 1994-present (foreign currency bank debt).
Reinhart and Tokatlidis (2000: 33) dating of recent financial liberalization: Domestic (notably interest rates) 1991, external (notably foreign-exchange market and participation by foreign financial institutions) 1993.
Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): A brief run on Barclays Bank (Dominion, Colonial and Overseas) in May 1951; 1985-1989; 1992; 1993-1995; at end of 1996 nonperforming loans were 18.6%.
Frankel and Rose (1996) list of currency crashes: None.
References
Primary sources:
--Laws and decrees:
East Africa Protectorate. Gazette. 1898-1920. The Official Gazette of the East Africa and Uganda Protectorates (1898-1913); The Official Gazette of the East Africa Protectorate (1913-1920). Mombasa (1898-1904?); Nairobi (1904?-1920): Government Printer. (According to one source, around 1920 the gazette was for a time called the Official Gazette of the Colony of Kenya and the East Africa Protectorate. Succeeded by Kenya gazette.)
Kenya. Gazette. 1921-present. The Official Gazette of the Colony and Protectorate of Kenya (1921-1957) The Kenya Gazette (1957-1971); Kenya Gazette (1981-present). Nairobi: Government Printer. (Successor to East Africa Protectorate gazette.)
Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.
--Publications of monetary authorities:
Central Bank of Kenya. Annual report. 1966/1967-present. First [etc.] Annual Report Year Ended 30th January, ... (1966/1967-1973/1974); Ninth [etc.] Annual Report for the Financial Year Ended 30th June, ... (1974/1975-1990/1991); Economic Report for the Financial Year Ended 30th June, ... (1991/1992 only?); Annual Report (by 1996/1997-present). Nairobi: Central Bank of Kenya.
Central Bank of Kenya. Monthly bulletin. 1994-present. Monthly Economic Review. Nairobi: Central Bank of Kenya.
Central Bank of Kenya. Quarterly bulletin. 1968-1993. Economic and Financial Review (1968-1984); Quarterly Economic Review (1985-1993). Nairobi: Central Bank of Kenya.
East African Currency Board. Annual report. 1920/1921-1971/1972. Report of the East African Currency Board for the Year ending 30th June... (1920/1921-1959); Report for the Year Ended 30th June ... (1961/1962-1970/1971); The Final Report of the East African Currency Board (1971/1972). London: Waterlow and Sons (1920/1921-1958/1959); Nairobi: Government Printer, Kenya (1959/1960-1964/1965), Printing and Packaging Corporation (1965/1966-1970/1971); East African Currency Board (1971/1972).
East Africa Protectorate. Board of Commissioners of Currency (also called Currency Board). 1898-1920. Reports in East Africa Protectorate gazette (listed above).
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.centralbank.go.ke>
--Other publications or Web sites:
Great Britain (United Kingdom). Colonial Office. Report on Kenya. 1921-1939. East Africa Protectorate (Colony and Protectorate of Kenya) ... Report for ... (1918/1919-1930); Annual Report on the Social and Economic Progress of the People of the Kenya Colony and Protectorate (1931-1938). London: His Majesty's Stationery Office.
South Africa. 1919. Department of Mines and Industries. Report on Trade Conditions in British East Africa, Uganda and Zanzibar. By T[homas]. Sleith. Cape Town: Cape Times Limited. (An eyewitness account of a June 1918 visit.)
I was also able to consult the IMF archives on changes of the exchange rate.
Main secondary sources:
Central Bank of Kenya. 1986. Central Bank of Kenya: Its Evolution, Responsibilities and Organization. Nairobi: Central Bank of Kenya.
Henry, J[ames] A., and H. A. Siepmann. 1963. The First Hundred Years of the Standard Bank. London: Oxford University Press. (The Standard Bank operated widely in Africa
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Maxon, Robert M. 1989. "The Kenya Currency Crisis, 1919-21 and the Imperial Dilemma." Journal of Imperial and Commonwealth History, v. 17. no. 3, May: 323-48.
Ochieng', W[illiam] R[obert], and R[obert] M. Maxon, editors. 1992. An Economic History of Kenya. Nairobi: East African Educational Publishers Limited. See especially Robert M. Maxon, "The Colonial Financial System," pp. 249-58.
Okelo-Obong, George Samuel. 1974. "Kenya's Financial Development: An Analysis from East African Currency Board to Central Banking, 1919-1971." Ph.D. disssertation, University of Nebraska-Lincoln.
Ross, W[illiam] McGregor. 1927. Kenya from Within: A Short Political History. London: George Allen and Unwin.
Tyson, Geoffrey William. 1963. 100 Years of Banking in Asia and Africa, 1863-1963. London: National and Grindlays Bank. (A history of the National Bank of India and Grindlays Bank, which merged to form National and Grindlays Bank.)
Monetary authorities: Kenya
| Dates | Type | Name | Source | Remarks |
| July 1896
-18 May? 1898 |
dollarization alongside government issue (of coins only) | Indian rupee (issued by Indian government [headquarters New Delhi, India]) alongside coins of Imperial British East Africa Company (headquarters Mombasa, East Africa Protectorate [now Kenya]) 1888-1890 | Imperial British East Africa Company, decision of 1888, cited in Ochieng' and Maxon (1992: 249) | The first bank was the National Bank of India (headquarters London, England), in Mombasa, in July 1896 (Tyson 1963: 113, 221). The second bank was the Standard Bank of South Africa (headquarters London, England), in Nairobi, on 2 January 1911 (Henry and Siepmann 1963: 330). The Imperial British East Africa Company was a private company formed to colonize Kenya and Uganda; it was chartered in the United Kingdom on 3 September 1888 (Ross 1927: 35). Coins were made in the 1000s; the first coins under British rule were issued in 1888. |
| 19 May? 1898
-30 July 1920 |
own currency board | East Africa Protectorate, Board of Commissioners of Currency (also called Currency Board) (headquarters Mombasa, East Africa Protectorate [now Kenya]) | United Kingdom, Order in Council of 19 May 1898, cited in Ross (1927: 199); East Africa and Uganda (Currency) Order in Council, 10 February 1905, cited in East African Currency Board annual report, 30 June 1921: 7 | The colonial government put currency issue on a more formal basis than the Imperial British East African Company had. The currency board first issued coins in 1898. It first issued notes on 2 April 1906 (Ross 1927: 202). It issued notes against deposit of silver Indian rupees or gold British sovereigns. It did not notes against deposits in London, unlike its successor the East African Currency Board (South Africa 1919: 2). |
| 31 July 1920
-1956 |
joint currency board (as part of a currency union) | East African Currency Board (headquarters London, England / Nairobi, Kenya from 22 August 1960) | United Kingdom, Secretary of State for the Colonies, Regulations Defining the Constitution, Duties and Powers of the East African Currency Board, 22 May 1920, reprinted in East African Currency Board annual report, 30 June 1921: 7-9; East Africa and Uganda Currency (No. 2) Order in Council, 26 April 1920, cited in East African Currency Board annual report, 30 June 1921: 2; East Africa Protectorate, Proclamation No. 80, 19 July 1920 | The United Kingdom created the East African Currency Board to gain seigniorage for its colonies of Kenya, Tanganyika (now the mainland of Tanzania), and Uganda; they were later joined by Zanzibar, British Somaliland (now part of Somalia), and Aden (now southern Yemen). The currency board also served Ethiopia, Eritrea, and Italian Somaliland (now part of Somalia) during and after the Second World War. The board issued notes first; it did not issue its own coins until January 1922, though it did take over liability for the coins of Kenya's predecessor currency board. Although the currency board operated in an orthodox manner, it did not attain 100% net foreign reserves against the monetary base until 1950 because of mistakes in its initial exchange policy. For details, see the remarks in the "Other" section above. |
| 1956
-13 September 1966 |
joint currency board-like (as part of a currency union) | East African Currency Board (headquarters Nairobi, Kenya) | United Kingdom, Secretary of State for the Colonies, Regulations Defining the Constitution, Duties and Powers of the East African Currency Board, as Revised and Approved on 16th September 1955, 16 September 1955, reprinted in East African Currency Board annual report, 30 June 1955: 10-11 | The East African Currency Board was allowed to hold up to East African £10 million in local securities, which at the time was equal to roughly 15% of its notes and coins in circulation. The maximum was raised to East African £20 million in 1957 (United Kingdom, Secretary of State for the Colonies, Regulations Defining the Constitution, Duties and Powers of the East African Currency Board, as Revised and Approved on the 23rd December, 1957, 23 December 1957, reprinted in East African Currency Board annual report, 20 June 1958: 8), and East African £25 million in May 1963. In November 1960 the board was allowed to engage in crop-related financing up to East African £5 million, raised to East African £10 million in December 1962 (East African Currency Board annual report, 30 June 1961: 7; 30 June 1963: 12). The board made partial use of these powers. Kenya joined the IMF on 3 February 1964. |
| 14 September 1966
-present (2005) |
central bank | Central Bank of Kenya or Banki Kuu Ya Kenya (headquarters Nairobi, Kenya) | Central Bank of Kenya Act, No. 15, 24 March 1966, cited in Central Bank of Kenya annual report, 30 June 1967: 5 | Different views about economic policy led Kenya, Tanzania, and Uganda to establish national central banks rather than continue with the East African Currency Board or convert it into a joint central bank. Tanzania was first to announce it would pull out. The first coins after independence were issued in 1966, by the central bank. Notes issued by the East African Currency Board ceased to be legal tender in Kenya, Tanzania, and Uganga on 14 September 1967, while coins issued by it ceased to be legal tender in all three countries on 10 April 1969 (East African Currency Board annual report, 30 June 1968: 1; 1969: 1). |
Exchange rate arrangements: Kenya
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 1887
-30 July 1920 |
fixed; used Indian silver rupee and own rupee-based coins, 1 (British) East African rupee = 1 Indian rupee, or 15 (British) East African rupees = UK£1 | Imperial British East Africa Company, decision of 1888, cited in Ochieng' and Maxon (1992: 249); United Kingdom, Order in Council of 19 May 1898, cited in Ross (1927: 197); United Kingdom, East Africa and Uganda (Currency) Order in Council, 10 February 1905, cited in East African Currency Board annual report, 30 June 1921: 7 | In 1887 the Sultan of Zanzibar granted a lease to the British East Africa Association (later the Imperial British East Africa Company) for Kenya's coast. The Indian silver rupee was the dominant currency of trade in countries around the Indian Ocean. It was made legal tender in Kenya in 1898. The 1905 law made the Indian rupee the standard coin of Kenya and set an exchange rate of 15 Indian silver rupees = 1 British gold sovereign (UK£1). This exchange rate lasted until the First World War began in 1914 (van Zwanenberg and King 1975: 280, 282). The Kenyan rupee-based currency, also used in Uganda, was decimalized in 1906. Importation of Indian rupee coins and notes was made illegal by East Africa Protectorate, proclamation of 17 July 1920, cited in Ross (1927: 204 n. 2). During the First World War, the silver had appreciated substantially against gold, so silver rupees appreciated against the gold-based pound sterling. United Kingdom, East Africa and Uganda (Currency) Order in Council, 2 March 1920 (cited in East African Currency Board annual report, 30 June 1921: 2), | |
| 31 July 1920
-31 December 1921 |
fixed (as part of a currency union); 10 East African rupees/florins = UK£1 (see Remarks) | United Kingdom, Secretary of State for the Colonies, Regulations Defining the Constitution, Duties and Powers of the East African Currency Board, 22 May 1920, reprinted in East African Currency Board annual report, 30 June 1921: 7-9; East Africa and Uganda Currency Order in Council, 2 March 1920, cited in East African Currency Board annual report, 30 June 1921: 2; East Africa and Uganda Currency (No. 2) Order in Council, 26 April 1920, cited in East African Currency Board annual report, 30 June 1921: 2; East Africa Protectorate, Proclamation No. 80, 19 July 1920 | Introduced a regional currency. At first the currency was to have been called the East African rupee, but before it was actually issued the British government decided, at the request of British settlers, to change the name to the florin (the name of the British coin worth two shillings, or one-tenth of a pound sterling). Small amounts of East African rupee notes and coins were manufactured and circulated early in the period. The East African currency was introduced at 1 East African rupee/florin = 1 Kenyan or Indian rupee. The East African rupee and florin were both decimalized. There was also a unit of account called the East African pound, equal to the pound sterling. Indian rupee coins were demonetized in Kenya and Uganda by Kenya, proclamation of 8 June 1921. The period for exchanging Indian rupees at 1 Indian rupees = 1 East African florin was 23 June-22 July 1921, plus five months more for small holdings by Africans. The Indian rupee was a silver coin, whereas the new East African currency was linked to the pound sterling, a gold-based currency (which however did not resume convertibility into gold until 1925). | |
| 1 January 1922
-1956 |
fixed (as part of a currency union); 20 East African shillings = UK£1 (1 East African shilling = 1 UK shilling) | United Kingdom, Kenya and Uganda (Currency) Order in Council, No. 1830, 10 August 1921, reprinted in East African Currency Board annual report, 30 June 1922: 10-13; Kenya and Uganda (Currency) (No. 2) Order in Council, No. 1831, 7 November 1921, reprinted in East African Currency Board annual report, 30 June 1922: 14 | Changed the unit of account from the East African florin to the East African shilling, named after the UK shilling. The rate of conversion was 2 East African shillings = 1 East African florin. | |
| 1956
-13 September 1966 |
pegged (as part of a currency union); 20 East African shillings = UK£1 (1 East African shilling = 1 UK shilling) | United Kingdom, Secretary of State for the Colonies, Regulations Defining the Constitution, Duties and Powers of the East African Currency Board, as Revised and Approved on 16th September 1955, 16 September 1955, reprinted in East African Currency Board annual report, 30 June 1955: 10-11 | This change in regulations converted the currency board into a currency board-like system, so the exchange rate changed from fixed to pegged. | |
| 14 September 1966
-17 November 1967 |
pegged; 20 Kenyan shillings = UK£1, or 1 Kenyan shilling = 0.124414g gold | Central Bank of Kenya Act, No. 15, 24 March 1966, cited in Central Bank of Kenya annual report, 30 June 1967: 5 | RR: Parallel market premium around 20%. | The Kenyan shilling replaced the East African shilling upon the breakup of East African Currency Board. Kenya agreed to a gold parity with the IMF on 9 September 1966 and registered it at the start of this period. |
| 18 November 1967
-23 August 1971 |
pegged; 17.1429 Kenyan shillings = UK£1, or 7.14286 Kenyan shillings = US$1, or 1 Kenyan shilling = US$0.14 = 0.124414g gold | Kenya, Minister of Finance, announcement of 21 November 1967, cited in Central Bank of Kenya annual report, 30 June 1968: 30 | RR: Parallel market premium in low to mid double digits. | In a coordinated response, Kenya, Tanzania and Uganda did not follow the devaluation of the pound sterling on 18 November 1967. The central bank suspended foreign-exchange transactions on 16 August 1971 and resumed on 24 August 1971 (Central Bank of Kenya annual report, 30 June 1972: 18). |
| 24 August 1971
-12 September 1971 |
pegged; 17.1429 Kenyan shillings = UK£1, or 1 Kenyan shilling = 0.124414g gold (nominally) | Central Bank of Kenya annual report, 30 June 1972: 5, 18; IMF ARER (1972: 254) | RR: Parallel market premium about 40%. | Gold convertibility for all countries ended in practice when the United States abandoned the gold standard on 15 August 1971. Kenya remained pegged to the pound sterling, so it in effect unpegged from the US dollar. The exchange rate listed against the pound sterling is that given by the IMF; the Central Bank of Kenya (annual report, 30 June 1972: 5) lists the exchange rate as 17.144 Kenyan shillings = UK£1. Apparently the IMF rate was the theoretical official rate and the rate listed by the central bank was the rate at which it actually dealt. |
| 13 September 1971
-10 October 1971 |
pegged; 17.1429 Kenyan shillings = UK£1, or 7.14286 Kenyan shillings = US$1, or 1 Kenyan shilling = 0.124414g gold (nominally) | Central Bank of Kenya, governor's announcement of 14 September 1971, cited in Central Bank of Kenya quarterly bulletin, July-September 1971: 11; IMF ARER (1972: 254) | RR: Parallel market premium around 25%. | The central bank quoted the pre-devaluation rate for US dollars. See the previous period on the exchange rate against the pound sterling. |
| 11 October 1971
-21 December 1971 |
pegged; 7.141826 Kenyan shillings = US$1, or 1 Kenyan shilling = 0.124414g gold (nominally) | Central Bank of Kenya annual report, 30 June 1972: 5, 18; IMF ARER (1972: 254) | RR: Parallel market premium in 25-30% range. | Switched from the pound sterling to the US dollar as the anchor currency. This was another coordinated move with Tanzania, which was already pegged to the dollar, and Uganda. The exchange rate listed against the US dollar is that given by the IMF; the Central Bank of Kenya (annual report, 30 June 1972: 5) lists the exchange rate as 7.1429 Kenyan shillings = US$1. Again, apparently the IMF rate was the theoretical official rate and the rate listed by the central bank was the rate at which it actually dealt. |
| 22 December 1971
-15 February 1973 |
pegged; 7.141826 Kenyan shillings = US$1, or 1 Kenyan shilling = 0.114592g gold (nominally) | Kenya, legal notice of 23 June 1981, cited in Central Bank of Kenya quarterly bulletin, October-December 1971: 7; Central Bank of Kenya annual report, 30 June 1972: 19; IMF ARER (1972: 254) | RR: Parallel market premium in low to mid double digits. | Followed the devaluation of the US dollar against gold on 18 December 1971, and adopted wider margins. |
| 16 February 1973
-12 March 1973 |
pegged; 7.141826 Kenyan shillings = US$1, or 1 Kenyan shilling = 0.103133g gold (nominally) | Central Bank of Kenya quarterly bulletin, January-March 1973: 9 | RR: Parallel market premium in high double digits. | Followed the devaluation of the US dollar against gold on 13 February 1973, holding the exchange rate against the dollar unchanged. On 2 March 1973, the central bank forbad commercial banks to deal in foreign exchange. It made the prohition after a new depreciation of the US dollar and the closure of foreign-exchange trading in major international centers. The central bank allowed tourist transactions (Central Bank of Kenya quarterly bulletin, January-March 1973: 10). |
| 13 March 1973
-29 June 1973 |
pegged; 7 Kenyan shillings = US$1, or 1 Kenyan shilling = 0.103133g gold (nominally) | Central Bank of Kenya, governor's announcment of 13 March 1973, cited in Central Bank of Kenya quarterly bulletin, January-March 1973: 10 | RR: Parallel market premium in mid double digits. | Revalued against the US dollar during a period when the dollar was weak, and allowed foreign-exchange dealings to resume. |
| 30 June 1973
-13 January 1974 |
pegged; 6.90 Kenyan shillings = US$1, or 1 Kenyan shilling = 0.10673g gold (nominally) | Central Bank of Kenya annual report, 30 June 1973: 6; IMF ARER (1974: 258, 261) | RR: Parallel market premium in mid double digits. | Revalued against the US dollar with Tanzania and Uganda. |
| 14 January 1974
-26 October 1975 |
pegged; 7.14286 Kenyan shillings = US$1, or 1 Kenyan shilling = 0.103133g gold (nominally) | Central Bank of Kenya quarterly bulletin, January-March 1974: 4; IMF ARER (1975: 184, 187) | RR: Parallel market premium generally in low double digits. | Made a slight devaluation with Tanzania and Uganda during a period of turbulent foreign-exchange markets. |
| 27 October 1975
-31 March 1978 |
pegged to rigid basket; 9.66 Kenyan shillings = 1 SDR, or 1 Kenyan shilling = 0.103133g gold (nominally) | Central Bank of Kenya, press release of 25 October 1975, reprinted in Central Bank of Kenya annual report, 30 June 1976: 63-4; IMF ARER (1976: 281) | RR: Parallel market premium in single digits to low double digits. | To avoid sharp changes against other currencies arising from the fluctuations of the US dollar, Kenya switched from the US dollar to the SDR as the anchor currency, with Tanzania and Uganda. This was a devaluation, since the new middle rate against the US dollar was 8.16 Kenyan shillings = US$1. |
| 1 April 1978
1 January 1979 |
pegged to rigid basket; 9.66 Kenyan shillings = 1 SDR | International Monetary Fund, Board of Governors, Resolution No. 31-4, 30 April 1976 ("Second Amendment") | RR: Parallel market premium generally in low double digits. De facto peg to US dollar. | The system of gold par values officially ended by agreement of IMF members. |
| 2 January 1979
-2 February 1981 |
pegged to rigid basket, multiple rates; official rate 9.66 Kenyan shillings = 1 SDR | Kenya, government announcement of 22 December 1978, cited in in Central Bank of Kenya annual report, 30 June 1979: 24, 78; Central Bank of Kenya, Exchange Control Circular No. 1/79/10, reprinted in Central Bank of Kenya annual report, 30 June 1979: 78 | RR: Parallel market premium in low double digits. De facto peg to US dollar. | A new import deposit scheme in effect generated multiple exchange rates. |
| 3 February 1981
-17 September 1981 |
pegged to rigid basket, multiple rates; official rate 10.15 Kenyan shillings = 1 SDR | Central Bank of Kenya quarterly bulletin, January-March 1981: 14 | RR: Parallel market premium in low double digits. De facto peg to US dollar until August 1981. | Devalued. |
| 18 September 1981
-9 December 1982 |
pegged to rigid basket, multiple rates; official rate 11.95 Kenyan shillings = 1 SDR | Central Bank of Kenya quarterly bulletin, July-September 1981: 16; IMF ARER (1982: 270) | RR: Parallel market premium in low to mid double digits. | Devalued. On 2 August 1982, the central bank suspended all foreign-exchange dealings following an attempted coup by air force officers. It allowed foreign-exchange dealings to resume on 10 August 1982. |
| 10 December 1982
-30 December 1982 |
pegged to rigid basket, multiple rates; official rate 13.74 Kenyan shillings = 1 SDR | IMF ARER (1983: 290) | RR: Parallel market premium in mid double digits. | Devalued. The basket was composed of the same currencies as were in the SDR. |
| 31 December 1982
-17 July 1983 |
pegged to rigid basket, multiple rates; official rate 14.06 Kenyan shillings = 1 SDR | Central Bank of Kenya annual report, 30 June 1983: 7; IMF ARER (1983: 290) | RR: Parallel market premium in low to mid double digits. | Devalued. IMF ARER lists the Kenyan shilling as being pegged to the SDR at a rate of 14.42 Kenyan shillings = 1 SDR as of 31 December 1983, but central bank reports characterize exchange rate policy as "flexible" starting here. |
| 18 July 1983
-14 May 1984 |
pegged to rigid basket, multiple rates; official rate 14.417241 Kenyan shillings = 1 SDR | IMF archives on Kenya's exchange rate | RR: Parallel market premium in low double digits. | Devalued. |
| 15 May 1984
-15 November 1984 |
pegged to rigid basket, multiple rates; official rate 14.478618 Kenyan shillings = 1 SDR | IMF archives on Kenya's exchange rate | RR: Parallel market premium in low double digits. | Devalued. |
| 16 November 1984
-28 March 1985 |
pegged to rigid basket, multiple rates; official rate 15.187159 Kenyan shillings = 1 SDR | IMF archives on Kenya's exchange rate | RR: Parallel market premium in single digits to low double digits. | Devalued. |
| 29 March 1985
-27 June 1985 |
pegged to rigid basket, multiple rates; official rate 15.896735 Kenyan shillings = 1 SDR | IMF archives on Kenya's exchange rate | RR: Parallel market premium in single digits to low double digits. | Devalued. IMF ARER (1986: 326) lists the exchange rate only to 6 decimal places; the IMF archives list them to more places. |
| 28 June 1985
-15 August 1985 |
pegged to rigid basket, multiple rates; official rate 16.148906 Kenyan shillings = 1 SDR | IMF ARER (1986: 326) | Devalued. | |
| 16 August 1985
-27 February 1986 |
pegged to rigid basket, multiple rates; official rate 17.737761 Kenyan shillings = 1 SDR | IMF ARER (1986: 326) | Devalued. | |
| 28 February 1986
-29 June 1986 |
pegged to rigid basket, multiple rates; official rate 18.58363 Kenyan shillings = 1 SDR | IMF ARER (1987: 307) | Devalued. | |
| 30 June 1986
-1987 |
pegged to rigid basket, multiple rates; official rate 19.135213 Kenyan shillings = 1 SDR | IMF ARER (1987: 307) | RR: Parallel market premium reappears November 1986, and is in single digits to low double digits. | Devalued. |
| 1987
-30 September 1991 |
flexible basket, multiple rates | IMF ARER (1988: 296) | RR: Parallel market premium generally in low double digits. | Moved to an unspecified basket as the anchor, according to IMF ARER (1988: 296), although see remark above for 31 December 1982. |
| 1 October 1991
-19 August 1992 |
flexible basket | IMF ARER (1992: 272) | RR: Parallel market premium in single digits to low double digits. | A system of foreign exchange bearer certificates replaced multiple exchange rates. |
| 20 August 1992
-8 March 1993 |
flexible basket, dual rate | IMF ARER (1993: 278) | The second exchange
rate was flexible.
RR: Parallel market premium peaked at 110% in December 1992. |
Introduced an export retention scheme, a type of dual rate. Exporters could sell 100% (later reduced to 50%) of thei foreign-exchange receipts to commercial banks at market rates. |
| 9 March 1993
-19 April 1993 |
pegged, dual rate; official rate 45 Kenyan shillings = US$1 | Central Bank of Kenya quarterly bulletin, January-March 1993: 19; IMF ARER (1994: 272) | RR: Parallel premium in upper double digits. | Devalued from the previous rate of 36 Kenyan shillings = US$1. IMF ARER lists the new rate as 45.6 shillings, which was perhaps the midpoint, while the central bank quarterly bulletin lists it as 45 shillings, which was perhaps the buying rate. |
| 20 April 1993
-13 May 1993 |
pegged, dual rate; official rate 60 Kenyan shillings = US$1 | Central Bank of Kenya quarterly bulletin, April-June 1993: 272 | RR: Parallel market premium in mid double digits. | Devalued. |
| 14 May 1993
-17 October 1993 |
pegged, dual rate; official rate 64 Kenyan shillings = US$1 | IMF ARER (1994: 272) | RR: Parallel market premium in mid to upper double digits. | Devalued. |
| 18 October 1993
-30 December 1997 |
independent float | Central Bank of Kenya quarterly bulletin, October-December 1993: 18; IMF ARER (1994: 272) | RR: Parallel market premium generally in single digits. | Unified the exchange rate and floated, although the appendix of IMF ARER (1994: 590) lists a dual rate as still existing as of 28 February 1994--apparently an error. |
| 31 December 1997
-present (2005) |
managed float | IMF ARER (1998: 488) | RR: Parallel market premium generally in single digits to December 1998, when data end. | The IMF reclassified the exchange rate. IMF ARER offers no reason; I hypothesize that it reclassified because the central bank intervened in the foreign-exchange market more heavily than before. |