Kenya’s foreign exchange reserves decline as shilling hits new low

FILE PIC: Central Bank of Kenya. / Xinhua

FILE PIC: Central Bank of Kenya. / Xinhua

Kenya’s foreign exchange reserves fell by $ 222 million (25 billion shillings) this week as the central bank released dollars into the market to bolster the local currency, according to a financial markets report released on Friday evening.

The Central Bank of Kenya (CBK) in the weekly update said reserves increased from $ 9.09 billion, the equivalent of 5.56 months of import coverage, to $ 8.87 billion , or 5.42 months of import coverage.

During the period, the shilling hit an all-time low against the dollar, trading at 112.1 against 111.1 in the week ending November 12.

The local currency has been under pressure since the start of the month as dollar inflows from key exports like tea and horticulture fall amid strong demand for foreign exchange for oil, machinery and goods exports equipment.

A low shilling normally leads to expensive imports, as more units of the local currency are needed in the trading process.

The shilling has also fallen against other major world currencies, including the pound sterling and the euro.

Despite declining dollar reserves, however, apex bank said the $ 8.87 billion was enough.

“This meets the CBK’s legal requirement to strive to maintain at least four months of import coverage, and the East Africa region’s convergence criteria of 4.5 months of import coverage. imports, “apex bank said.

Source (s): Xinhua News Agency

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