Official foreign exchange reserves have fallen by nearly Sh22 billion in the past one month at a time the Kenyan shilling has also weakened.
The latest weekly bulletin from the Central Bank of Kenya (CBK) shows that the reserves stand at Sh834.1 billion ($8.22 billion) compared to Sh855.9 billion ($8.44 billion) at the end of September.
The biggest reduction during the month was in the week ending October 25 as reserves sank by 1.2 per cent to stand at Sh842.7 billion or $8.3 billion. In the week that ended on November 1, the forex pile fell by a lower figure of 1.0 per cent to stand at Sh834.1 billion or $8.22 billion.
The CBK did not officially disclose the reason for the reduction in reserves, but sources at the monetary authority indicated that last week’s development had more to do with external payments than its (CBK’s) use to intervene in the market. It was, however, not possible to establish what had happened in the previous three weeks when the hard currency stockpile had also been falling and the local unit also displayed weakness.
Sources at the CBK said that in the past week, the regulator held a balanced position of inflows and outflows on its activity in the interbank currency market — at about $40 million or Sh4 billion each way — with the fall in reserves attributed largely to external payments.
They added that since the year began, the regulator has held a net buy position in the dollar market, attributing the stability of the shilling to market forces. The shilling has come under pressure twice this year — in March and towards the end of October.