The current official reserves cover 5.58 months of imports showing there has been significant decline in the cushion.
Official foreign exchange reserves fell by nearly Sh22 billion last month to stand at Sh851.36 billion ($8.436 billion) as of September 27 compared to the end of August.
The reserves stood at Sh873.16 billion ($8.652 billion) at the end of August, equivalent to 5.76 months of import cover. The current official reserves cover 5.58 months of imports showing there has been significant decline in the cushion.
The decline in reserves came in a month when the local unit faced depreciation pressures that drove it to just above 101 units to the dollar in the face of mounting fiscal challenges and investor exits from the Nairobi Securities Exchange.
The Central Bank of Kenya does not normally disclose its purchase or sale of foreign currency in the market. It also pays external state debt in hard currency reducing the forex holdings.
However, the shilling has partly recovered to 100.92 units to the greenback just as market players said the current rates are likely to be maintained due to matching flows on both demand and supply sides.
“The current margins [struck on Monday] for the pair are likely to be preserved in the short run on the back of matching flows on both the demand and supply counter,” said Commercial Bank of Africa in an update to clients.
The bank cited steady flows from various sectors of the economy were well matched on Monday.
On Tuesday, the CBK reported the shilling buying at 100.82 and selling at 101.02 – giving a mean of 100.92. In terms of the average exchange rate, this was slightly weaker than Monday’s opening of 100.90 but stronger than last Friday’s 100.96 units to the American currency.
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