Kenya’s foreign exchange reserves increased by $21 million to reach $7.638 billion in the week that ended on 12th February 2021. Despite the jump, the reserves remain at relatively low levels having dropped from $8.496 billion a year ago. In the week that ended on 4th February, the reserves dropped to $7.617 billion, the lowest level in more than two years.
According to data released by the Central Bank of Kenya (CBK), the reserves are adequate to cover 4.69 months of imports, above CBK’s statutory requirement of at least 4 months of imports cover and East African Community’s requirement of at least 4.5 months of imports cover.
The Kenya shilling remained steady against the US dollar and other major currencies in the past week. The shilling exchanged at KSh109.45 per US dollar on 11th February, compared to KSh109.86 per US dollar on 4th February 2021.
Liquidity in the market was tight, with excess reserves held by commercial banks declining to KSh11 billion, from KSh13 billion the previous week.
The equity market registered improvement as the NSE indices all went up during the week ending on 11th February while the bond turnover in the local secondary market fell by 22.9%.
International oil prices went up during the week as oil producers cut production and global demand for the commodity increased. The rise in oil price is expected to put pressure on the foreign exchange reserves. Nonetheless, increasing horticultural exports to Europe and high diaspora remittances are likely to boost the level of foreign exchange reserves held by the central bank.
