Currencies

Forex reserves plunge piles pressure on shilling

cbk

Kenya’s foreign exchange reserves have plunged further, raising fears of the stability of the shilling days ahead. FILE PHOTO | NMG

Summary

  • Kenya’s foreign exchange reserves have plunged further, raising fears of the stability of the shilling days ahead.
  • The Central Bank of Kenya (CBK) data shows the reserves dropped by Sh9.45 billion to Sh826.77 billion ($7.874 billion) representing 4.76 months of import cover, from Sh836.33 billion ($7965 million) or 4.84 months cover.
  • The reserves have been on the decline from 5.39 months of import cover recorded the beginning of this year ($8,758 million).

Kenya’s foreign exchange reserves have plunged further, raising fears of the stability of the shilling days ahead.

The Central Bank of Kenya (CBK) data shows the reserves dropped by Sh9.45 billion to Sh826.77 billion ($7.874 billion) representing 4.76 months of import cover, from Sh836.33 billion ($7965 million) or 4.84 months cover.

The reserves have been on the decline from 5.39 months of import cover recorded the beginning of this year ($8,758 million).

“The CBK usable foreign exchange reserves remained adequate at $7,874 million (4.76 months of import cover) as of April 2. 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 the CBK.

Covid-19 has hit tourism and farm exports, which are the major contributors of inflows

Last month, the CBK said it would buy Sh40.5 billion ($400 million) from banks between March-June to boost reserves.