CBK forex reserves fall to 34-month low

Kenya’s forex reserves held at the Central Bank of Kenya (CBK) have fallen to a 34-month low, weighed down by external debt repayment obligations amid reduced inflows from the tourism sector.

The CBK data as at January 7 showed that the reserves stood at $7.722 billion (Sh849.42 billion), the lowest since the week ending March 8, 2018.

In the past one month, the reserves have gone down by $127 million (Sh13.9 billion) and are now enough to cover 4.74 months’ worth of imports.

With the shilling under pressure, the CBK has also in the past few months sold dollars occasionally in the market to prevent volatility, although the regulator does not disclose when and how much these sales entail.

“This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover,” said CBK in the weekly bulletin of January 8.

Last month, the CBK made a scheduled interest payment of for Kenya’s $2 billion (Sh220 billion) 10-year Eurobond tranche that was issued in June 2014.

The interest on the paper is paid twice annually, in June and December.

It was issued with a fixed interest rate of 6.785 percent, which works out to $135.7 million (Sh14.93 billion) per year, paid in two instalments of $67.85 million (Sh7.46 billion) each.

Foreign debt payments are usually made from the CBK’s foreign exchange reserves.

Other outstanding Eurobonds include the 10-year and 30-year loans issued in February 2018, for $1 billion each, and the seven-year ($900 million) and 12-year ($1.2 billion) loans taken in May 2019.