The Lower Eastern Times Opening The Third Eye
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This week, Kenya’s foreign exchange reserves decreased by a significant 200 million U.S. dollars, reaching a four-week low, according to the Central Bank of Kenya (CBK) in its weekly financial markets update released on Friday evening.
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The CBK reported that forex reserves stood at 9.05 billion dollars, or 4.6 months of import cover, on Thursday, down from 9.25 billion dollars on February 20.
The reserves had peaked at 9.37 billion dollars on February 13 before starting to decline, the central bank noted.
Despite the drop in reserves, the CBK emphasized that the reserves remain sufficient, continuing to meet the statutory requirement to maintain at least four months of import cover.
The decline in forex reserves occurred alongside increased pressure on the shilling, which fell to a one-month low of 129.64 against the dollar this week, down from an average of 129.2, according to the CBK.
The shilling also weakened against the British pound and the euro, trading at 163.8 and 139.7, respectively, as reported by the CBK.
To stabilize the shilling amid market volatility, the central bank typically sells dollars, which helped the shilling close at 129.2 on Friday.
In addition to the market volatility, increased demand for dollars from importers, especially at month-end, also contributed to the drop in forex reserves.
