Kenya’s official forex reserves have hit a year high on the receipt of Eurobond, and International Monetary Fund (IMF) and World Bank loans, offering a boost to the shilling.
The forex reserves held at the Central Bank of Kenya (CBK) rose by Sh218.06 billion ($2.02 billion) in the last two weeks to close last Friday at Sh1.024 trillion ($9.49 billion).
The CBK said in its weekly bulletin that the reserves represent 5.81 months of import cover.
Kenya’s official forex reserves have hit a year high on the receipt of Eurobond, and International Monetary Fund (IMF) and World Bank loans, offering a boost to the shilling.
The forex reserves held at the Central Bank of Kenya (CBK) rose by Sh218.06 billion ($2.02 billion) in the last two weeks to close last Friday at Sh1.024 trillion ($9.49 billion).
The CBK said in its weekly bulletin that the reserves represent 5.81 months of import cover. The data shows the jump, from Sh806.8 billion ($7.47 billion) two weeks ago, has sent the total reserves to a level last seen in mid-July last year (Sh1.04 trillion or $9.67 billion).
The increased forex reserves indicate the receipt of Sh107.94 billion ($1 billion) Eurobond proceeds, Sh80.96 billion ($750 million) World Bank loan and Sh43.94 billion ($407 million) from the IMF. The Treasury normally sells the hard currency proceeds of external loans to the CBK in exchange for shillings, which can then be deployed to the intended budgetary programmes locally.
Kenya last month issued a 12-year Eurobond, the fourth sovereign debt to be floated by the country since 2014.
The IMF released Sh43.86 billion ($407 million), which is the second tranche of the lender’s $2.4 billion (Sh258.65 billion) facility to Nairobi. Kenya got the first disbursement amounting to $314 million (Sh33.84 billion) in April.
The World Bank also last month approved a $750 million loan to Kenya aimed at supporting policy reforms for strengthening transparency and accountability in public procurement and investment spending. The higher foreign reserves are now expected to support the shilling by giving the market confidence that the CBK has enough firepower to deploy in case of exchange rate volatility.
The shilling has remained relatively stable to the dollar, remaining below 108 units to the dollar since April 25 when it averaged 108.02. it opened yesterday at 107.94. The country also gets foreign currency inflows from export and tourism and diaspora remittances.
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