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Kenya's forex reserves up by Sh81.9bn–CBK

The growth in forex reserves will likely shield the shilling against marked pressures

In Summary
  • The latest CBK data shows usable foreign exchange reserves remained adequate at Sh1.05trillion compared to Sh976.2billion) the previous week.
  • The forex reserves are now equivalent of 5.43 months of import cover more than 120 basis points above the EAC required minimum.
A cashier at a local Forex count dollars and shillings
A cashier at a local Forex count dollars and shillings
Image: Fredrick Omondi

Kenya’s foreign exchange reserves grew in the week ended September 10  by Sh81.9billion, strengthening the shilling to 109 levels.

Latest Central Bank of Kenya data shows usable foreign exchange reserves increased to $9.629billion(Sh1.05trillion) in the week ended September 10 compared to $8.883billion(Sh976.2billion) the previous week.

The forex reserves are now equivalent of 5.43 months of import cover more than 120 basis points above the EAC required minimum.

This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover,” said CBK.

The apex bank did not give a reason for the huge increase in reserves.

The rebound in the reserves saw the shilling strengthen to the dollar on Friday trading at 109.87 from 110.09 on Thursday.

Forex traders had on Friday said the Kenyan shilling was expected to strengthen after hard currency inflows into the government's debt helped it make some gains.

On Monday mid-morning , the local unit traded at 109.85 to the dollar before resuming to trade a 109.90.

Traders attributed the stability of the shilling to dollar supply matching importer demand.

The reserves had in the previous week declined by Sh11billion as the Central bank released more dollars into the market to keep the shilling firm.

This, however, did not calm down the depreciation wave, as the shilling still went above 110 levels, trading at 110.03 against the greenback on Monday .

This was the weakest the shilling had been since February 3 when it traded at 110.11 units to the dollar.

The drop in the dollar reserves was also be attributed to external loans interest payments.

In August, the Central bank was due to pay the latest semi-annual interest installments on the $2 billion(Sh219.8 billion) Eurobond contracted on February 2018 and a nine-year, $1.25 billion (Sh137.4 billion) syndicated loan that was taken up in February 2019.

The external debt payments are made by the bank's dollar reserves  on behalf of the government.

The growth in forex reserves will likely shield the shilling against marked pressures in the international market that have seen traders pile dollars.