Market News

Import cover hits four-month high

The Central Bank of Kenya (CBK) building in Nairobi. FILE PHOTO | NMG
The Central Bank of Kenya (CBK) building in Nairobi. FILE PHOTO | NMG 

The Central Bank of Kenya (CBK) foreign exchange reserves hit a four-month high of $7.24 billion (Sh733.4 billion) last week.

According to CBK data, the reserves last exceeded this level on October 19 last year and have since been below $7.24 billion. The amount achieved on February 15 is equivalent to 4.84 months of import cover, also the highest level since the same date last year.

The reserves fell below $7 billion on January 18, but have since been on the rise, the CBK indicated in the latest weekly report.

With the reserves having increased, the shilling has in recent times strengthened to below 102 and has even hit slightly above 100 units to the dollar, after mostly hovering above Sh103 for the better part of last year.

The increase in foreign exchange arsenal comes as the government engages with the International Monetary Fund (IMF) which has set a minimum figure or a floor of the reserves.

January 2016 IMF staff report indicated a figure of $7.23 billion as the floor for net international reserves for the end of June last year.

The multilateral lender had also set the reporting for the reserves to be on a monthly basis, such that data had to be sent within 20 days after each month ended.

In the most recent update, the IMF has said that access to the Sh152 billion insurance facility agreed on three years ago has been only on condition that Kenya completes a review of its economic developments since last year.

The facility is therefore virtually suspended until the review is completed.