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Forex reserves rise Sh25bn on strong shilling

forex bureau
An electronic currency display board at a forex bureau in Nairobi. FILE PHOTO | NMG 

Kenya’s official foreign exchange reserves have risen to a five-month high after sharp gain of Sh24.5 billion ($244 million) last week.

Official data from Central Bank of Kenya (CBK) shows that the reserves now stand at Sh841.7 billion ($8.392 billion), equivalent to 5.45 months of import cover.

In the week ending March 8, they stood at Sh817.2 billion ($8.148 billion), representing 5.29 months of import cover.

The CBK did not respond to queries Monday on the source of the dollars driving the spike in reserves last week.

The regulator, however, usually raises the forex cover when the government takes up foreign loans and sell on the dollars to the regulator for shillings, which can be deployed in the local economy.

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The CBK also occasionally takes advantage of a strong shilling to buy up dollars from the open market, while it can also buy the greenback as a monetary policy action to stave off volatility when the shilling is strengthening too quickly against the dollar.

Leading up to last week, the shilling had strengthened to a three-and-a-half year high of 99.65 units to the dollar, before ceding some ground towards the end of the week to settle at 100.29 due to increased dollar demand by corporate buyers.

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