Kenya’s Forex Reserves Surge $11Bn To Record High of $9,352 Bn

Diaspora remittances are part of Kenya’s largest foreign exchange earner, largely contributing to the country’s forex reserves aimed at stabilising the shilling.

Kenya’s foreign exchange reserves rose $11 billion to touch a record high of $9,352 billion in the week ended Aug. 6, 2021, the Central Bank data showed Friday. 

The forex reserves are now the equivalent of 5.72 months of import cover, hovering just above the EAC required minimum.

The reserves had in the previous week declined by $30 billion to $9,341 billion from $9.37 billion the prior period.

In July, according to market analysts, the shilling shed 70-cents of its value over the month on the back of rising dollar demand pressures.

“FX reserves however ended the month higher at US$ 9.34 billion, up to US$ 1.23 billion, reflecting the receipt of external funding,” Stephanie Kimani, NCBA Research noted in their monthly report.

However, towards the end of the month, the reserve position gradually declined by about US$ 280 million as the government utilized funds for intended budget support.

According to the report, while dollar inflows should remain supported by healthy diaspora flows and export receipts, this will likely be offset by rising importer dollar demand in light of increased demand for capital goods and higher crude oil prices. 

“To be sure, the current account deficit widened to 5.40% of GDP in the 12-months to June 2021 compared to a deficit of 4.80% at the end of 2020,” the report states.