Kenya’s foreign exchange reserves last week fell to one of the lowest levels in years, according to data from the Central Bank. The reserves decreased by $246 million in one week to $7,359 million, the lowest level since March 2018, from $7,605 million a week earlier.
Kenya holds the largest stockpile of foreign currency in East Africa. The reserves have been on a steady decline in the past year as the Central Bank of Kenya used the funds to prop up the depreciating shilling. In the 12 months from January 2020 to December 2020, the reserves decreased by $1 billion to $7.75 billion from $8.76 billion at the start of 2020.
The Central Bank of Kenya said that the reserves are adequate to cover 4.52 months of imports, slightly above the bank’s statutory requirement of at least 4 months of import cover and narrowly above East Africa Community’s requirement of 4.5 months of import cover.
In the week that ended on 4th March, the shilling remained stable against major international currencies, exchanging at KSh 109.69 per US dollar on March 4, compared to KSh 109.77 per US dollar on February 25, 2021.
Commercial Banks’ excess reserves increased to KSh 13.5 billion in the week that just ended, from KSh 12.5 billion the week earlier. The average interbank rate rose to 4.70% in the week running from February 26 to March 4, 2021, compared to 4.16% in the week of February 19 to February 25, 2021.
