The Central Bank of Kenya (CBK) is actively exploring the possibility of adding gold to its foreign exchange reserves as part of a strategy to diversify away from traditional currencies, Governor Kamau Thugge has revealed.
- •Kenya’s foreign reserves are currently dominated by the US dollar, with only 0.02 tonnes (20 kg) of gold held as of the latest data.
- •With a 29% year-to-date rally, gold has become one of the top-performing assets as investors abandon trade-war-exposed stocks.
- •Gold prices began climbing sharply in early 2024 as central banks, looking to move away from the US dollar and guard against sanctions, ramped up their buying.
Speaking to Bloomberg TV on the sidelines of the International Monetary Fund (IMF) and World Bank Spring Meetings in Washington, Thugge confirmed that a team is assessing the feasibility of the move but declined to set a specific timeline.
The push to include gold in Kenya’s reserves comes as the precious metal hits record highs, surpassing $3,500 an ounce—a 40% surge from a year ago. Gold has emerged as the best-performing major commodity this year, driven by geopolitical tensions, economic uncertainty, and strong demand from central banks worldwide. Kenya’s foreign reserves are currently dominated by the US dollar, with only 0.02 tonnes (20 kg) of gold held as of the latest data. By increasing its gold reserves, the CBK aims to hedge against currency volatility and strengthen financial stability, following a trend seen among other central banks globally.
The CBK’s gold reserve plans coincide with legislative efforts to formalize Kenya’s gold sector. Parliament is currently reviewing a bill to establish a Gold Processing Corporation, which would oversee and streamline the country’s gold trade. This could enhance local gold production and reduce illicit outflows, potentially supporting the CBK’s reserve strategy.
The move aligns with a broader shift among central banks, particularly in emerging markets, to boost gold holdings as a safe-haven asset. Countries like China, Russia, and India have been aggressively accumulating gold, reducing reliance on the US dollar amid geopolitical shifts and economic sanctions.
While Governor Thugge did not specify when Kenya will begin accumulating gold, the move signals a strategic shift in reserve management. If implemented, Kenya would join a growing list of African nations, including Egypt and Ghana, that are increasing their gold reserves to safeguard against economic instability.
READ;
Gold Worth US$ 30.7 Billion Smuggled Out of Africa in 2022 – Study
