The CBK says in its weekly bulletin the stock of foreign exchange reserves stood at $7.42 billion (Sh754 billion), which is equivalent to 4.98 months of import cover.
The forex reserves, however, remain above the statutory requirement of four months of import cover despite a declining streak since May 31 when they stood at $8.26 billion.
Kenya’s import cover has fallen for the 10th consecutive week, touching the lowest level since March 16 according to the latest Central Bank of Kenya (CBK) data.
The CBK says in its weekly bulletin the stock of foreign exchange reserves stood at $7.42 billion (Sh754 billion), which is equivalent to 4.98 months of import cover.
The forex reserves, however, remain above the statutory requirement of four months of import cover despite a declining streak since May 31 when they stood at $8.26 billion.
Besides imports, the CBK uses the forex reserves to iron out adverse volatility on the shilling by selling the greenback to ensure demand for the dollar does not significantly outstrip supply, depressing the shilling. The regulator also uses reserves to pay State foreign loans.
The latest CBK numbers indicate the reserves dropped by a marginal 0.35 per cent week-on-week.
The local unit appreciated 0.09 per cent week-on-week to exchange at an average 103.79 units to the dollar compared to 103.89 the previous week.
“The appreciation of the shilling follows positive sentiments after the peaceful general elections,” the CBK says. Analysts at Genghis Capital expect the reserves to be steady for the remainder of the year supported by inflows from tourism, tea exports and remittances.
“What we saw last week is that they (forex) did not go down as much as previous weeks, meaning that the shilling wasn’t much supported by the CBK,” Genghis senior research analyst Churchill Ogutu said on phone.
“Going forward, we expect the forex to steady around the current levels supported by tourism sector, whose outlook is bullish, coupled with tea earnings.”
The country’s dollar stock rose sharply from late March largely driven by $2.24 billion foreign loan inflows. They were $986.9 million (Sh101.88bn) loan from the Chinese government, $800 million (Sh82.58bn) syndicated commercial loan and $450 million (Sh46.45bn) loan from Preferential Trade Area and Afrexim Bank, the Treasury data shows.
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