Dollar rationing could be a sign of structural defects in the economy

US dollar bills on background with dynamics of exchange rates. [Getty Images]

In an unprecedented move in recent history, the Central Bank of Kenya (CBK) issued a cautionary guideline for commercial banks to ration dollars. This seems to have caught many businesses, dealers and analysts by surprise. Official data still project a healthy dollar reserve for the country, even above the East African Community import cover guide.

For many ordinary folks, such pronouncements mean little to them as only a small population ever deals in forex currencies. However, the consequences of this rationing have far-reaching effects at household or individual levels. In a globalised world, complex economic interactions are facilitated behind the scenes through the financial markets to make available basic goods and services to consumers at affordable prices.