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Kenya’s forex reserves fall to five-year low as shilling depreciates

Sunday September 4, 2022

Kenya’s foreign exchange reserves fell by a record 28 billion shillings (233 million U.S. dollars) this week to settle at a five-year low amid a sustained decline of the local unit against global currencies, the Central Bank of Kenya (CBK) said in its weekly update of the financial markets released on Friday evening.

The apex bank noted that the reserves fell from 7.61 billion dollars to 7.37 billion dollars.

The last time the reserves stood at such a level was in October 2017, underpinning the pressure the Central Bank is facing in a bid to shore up the forex reserves amid the decline of the shilling and increased demand for dollars by importers.

The east African nation’s foreign exchange reserves have sustained a downward trend in the past weeks as the apex bank uses part of its stockpile to stabilize the shilling against falling to a level that may disrupt the financial markets.

During the week, the shilling declined to exchange at an all-time low of 120.05 against the dollar, down from an average of 119.72 the previous week.

Against the Euro, the shilling closed the week at a low of 120.08 and the Sterling Pound 140.94, said the bank.

The new reserves cover 4.2 months of import cover, down from 4.46 months the previous week.

“The usable foreign exchange reserves remain adequate. This meets the CBK’s statutory requirement to endeavor to maintain at least four months of import cover,” said CBK.

The Kenyan currency has declined about 5 percent against the dollar since the year began amid global crises like the Russia-Ukraine conflict that have disrupted major exports including tea and horticulture, reducing inflows.


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