Foreign exchange reserves held at the Central Bank of Kenya (CBK) have risen Sh23 billion ($232 million) since the beginning of the year, as the stronger shilling allows the regulator to bulk up reserves at a time of high dollar inflows.
Latest CBK data published in its weekly bulletin shows that the reserves are now at a near four-month high of $8.232 billion (Sh824.8 billion) having risen from $8 billion (Sh801.7 billion) at the beginning of the year.
Most of last year, the reserves were on a downward trend. In the past week alone the reserves rose by $96 million (Sh9.6 billion).
The CBK is normally able to build on the reserves when the shilling is strengthening, taking advantage of cheaper dollars in the market.
“The CBK usable foreign exchange reserves remained strong at $8.232 billion (5.4 months of imports cover) as at February 7. This meets the statutory requirement to endeavour to maintain at least four months of import cover, and the Eat Africa Community (EAC’s) convergence criteria of 4.5 months of import cover,” said CBK in the bulletin.
The regulator may also have intervened by buying the greenback to prevent shilling’s volatility on the gain side last week, when the currency looked poised to run to the sub-100 level to the dollar — the opposite of the dollar sales the regulator makes when the shilling is weakening too quickly for its liking.
This year, market watchers are also keen to see how the CBK manages the reserves in light of the heavy external debt obligations, which include maturities of a $750 million (Sh75 billion) Eurobond tranche and syndicated loans.
There are also continuing interest payments on existing Eurobond loans and the SGR loan to service, which would be expected to weigh on the reserves.