As lockdown measures are gradually eased and businesses return to operation, the Kenya shilling is expected to come under pressure as merchandise importers increase demand for US dollars.
CBK forex reserves remain adequate at KSh 989 billion (USD9302 million) as at June 11 providing 5.59 months of import cover. CBK says that this is above the statutory requirement of maintaining at least four months of import cover and EAC region’s convergence criteria of 4.5 months of import cover.
Kenya Shilling
The shilling remained stable in the week against major international currencies exchanging at KSh 106.60 per US dollar, KSh 136.32 per British Pound, and KSh 121.26 per Euro on June 11.
There is an expectation that the shilling may come under pressure as Kenya eases coronavirus restrictions that will see importers increase dollar demand. Furthermore, the slowdown in diaspora remittances which recorded a 9 percent decline in April will pile pressure on the shilling. CBK governor said during MPC meeting that remittances may decline by 12 percent in 2020.
However, the high level of forex reserves will provide sufficient buffer to shield the shilling from external shocks in the short term.
T-Bills
The Treasury bills auction of June 11 received bids totalling KSh 69.7 billion against an advertised amount of KSh 24.0 billion, representing a performance of 290.5 percent. CBK accepted KSh 22.87 billion.
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