Kenya’s forex reserves have dipped by an equivalent of Sh26.5 billion ($262 million) since the beginning this year to Sh858.52 billion ($8.496 billion).
The reserves have fallen from a high of $8.94 billion (5.59 months of import cover) recorded on October 24, according to Central Bank data. In the absence of a major external debt issuance since the last Eurobond in May, CBK has depended on the normal market flows from diaspora remittances and exports to replenish its pile of hard currency.
Sterling Capital head of research Renaldo D’Souza said the decline is to be expected considering the huge jump triggered by the $2.1 billion Eurobond in May.
“Last year, the reserves were high due to the Eurobond issued. The reserves’ movement is normal as long as they do not fall below the preferred threshold (of imports cover),” Mr D’Souza said.
The CBK’s statutory requirement is to maintain the reserves to a threshold of at least four months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover.