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Kenya’s foreign exchange reserves surged to a fresh all-time high of KSh981.3 billion for the week ended Friday, June 5 data from the Central Bank of Kenya reveals.
“The CBK usable foreign exchange reserves remained adequate at USD 9,261 million (5.56 months of import cover) as at June 4,” CBK said in its weekly bulletin dated June 5, 2020.
”This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover,’’ CBK said.
As a result, the Kenya Shilling appreciated by 0.8 percent against the US Dollar to close the week at Kshs 106.1, from Kshs 106.9, recorded the previous week supported by inflows from remittances, agricultural exports as well as horticulture exports amid low dollar demand from merchandise importers.
On a Year to Date (YTD) basis, the shilling has depreciated by 4.7 percent against the dollar, in comparison to the 0.5 percent appreciation in 2019.
This is a result of the loans received from the World Bank, the International Monetary Fund (IMF), and the African Development Bank (AfDB).
In May, World Bank approved the KSh106 billion loan to Kenya for budgetary support. The IMF provided KSh79 billion through the Rapid Credit Facility.
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However, the pressure to the currency will continue coming from high dollar demand from foreigners exiting the market as they direct their funds to safer havens, subdued diaspora remittances evidenced by the 9.0% decline to USD 208.2 mn in April 2020, from USD 228.8 seen the previous month according to Cytonn Investments.
