Let's peg KES it to the Yuan, period!

I agree that pegs rarely work unless like the SNb you have the weaponry to enforce it.
CBK must now think outside the box. Fx controls should temporarily be brought in while we have this EU crisis. In effect, CBK must control the amount of dollars that each bank and other fx dealers hold. It should also increase the pain thresholds in the discount window...
This will buy us time to fix the fundamentals e.g. BoP

CBK INTERVENTION HAS NOT HELPED!!!!

http://af.reuters.com/ar...mp;virtualBrandChannel=0

I must say in the last 2-3 years I have come to admire the Chinese financial authoriries, despite all the noise about their controls.... a new order of "controlled capitalism"?? Pumped billions to lift the economy in 2009, started pro-actively hiking rates and controlling property market in the last 2 years to check inflation, now I saw they're using their offshore banks to encourage other institutions to maintain RMB deposits/reserves ->probably targeting RMB as a reserve ccy in the near future, as trades with China become unavoidable.

CBK is really caught between a rock and a hard place. They may have to resort to some form of exchange controls, similar to the ones in the 90's, on large tickets, as they run out of reserve ammunitions.