Businesses and money changers have suffered major disruptions following
the suspension of the Kenyan currency conversion in Uganda.
Consequently, many have seen the value of their money fall but also
had to contact their friends near the border to help them do conversions in
In a statement issued last evening, Bank of Uganda said it had been
informed by the Central Bank of Kenya (CBK) that they have issued a new series
of banknotes effective May 31, 2019, with a view to combat illicit flows and
counterfeits into Kenya.
“Bank of Uganda will not accept Kenya Shillings at its counters
with immediate effect,” BOU said in a statement. “CBK has also suspended
currency conversion and repatriation of Kenya currency.”
Julius Karombe, the coordinator of the Uganda Maize Exporters
Association, said to avoid the impact, traders whose goods are already in Kenya
are asking to be paid in Uganda shillings.
He told URN that those that have taken goods to Kenya are paid in the bank and are able to receive an electronic conversion and can withdraw Uganda
shillings. Those with cash, he said, have connections at the border and
people are able to cross, exchange money.
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He said those who have the money in the bank were not affected
because it is up to the bank to liaise with Bank of Uganda and Central bank of
Kenya and give them new series.
But some bankers note that the problem is that there is still limited access to the new
Kenyan shilling series.
Stephen Kaboyo, who runs the Alpha Capital Forex bureau, said: Until yesterday,
we were trading KES normally. The announcement has taken the market by
surprise. Our expectation is that this will be short-lived and business will be
Money changers said they went to the banks where they have accounts and their
money was rejected.
Madoi Bruhan, a money changer in Mbale, said that business is now on
standstill since morning. He adds that Equity Bank has also stopped doing business with
them since the announcement was made.
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Mutwalib Masaba, the chairperson of the money changers in Mbale, said
the prices for the Kenyan currency have dropped because no wants to take it. He
says that on Monday, they were selling the currency at 36.6shs but now it has dropped
to 34 shillings.
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traders do their business with Kenya more than anyone else in the region.
Commercial banks today allow conversions of KES despite earlier indications
that they would change smaller notes and leave the KES 1000.
A banker told URN on Tuesday “Most banks are looking to dispose off cash they
have in the vault. No one in the industry is buying – even forex bureaus.”
He said the day was characterized by “a lot of confusion. We are no longer
taking any cash in Kenya shillings.”
Those who went to the banks to do normal banking were also turned away.
Andrew Muhimbise went to Equity bank in the morning with KES 2000 in the 1,000
denominations. The manager told him the BOU announcement took immediate effect
and they would not take the notes.
He said he was going to put it on the buses headed to Kenya, where people are
buying at discount and taking the money back to Kenya.