Kenya’s Foreign Exchange Reserves Slide by $355 million on Payments

The Central Bank of Kenya conducts a survey on remittance inflows every month through formal channels that include commercial banks and other authorised international remittances service providers in Kenya.

Kenya’s foreign exchange reserves fell by $203 million to $8.986 billion as of August 26 from $9.189 billion as of August 19.

According to the Central Bank of Kenya’s  (CBK) weekly statistical bulletin, the foreign currency reserves are sufficient to cover 5.49 months of imports, above the bank’s statutory requirement of at least 4 months of import cover. 

The decline is attributed to external loans interest payments.

The payments have maintained ample liquidity in the money markets with the average inter-bank rate standing at 3.36 per cent as of August 31 with the CBK mopping up Ksh 60 billion that was in excess. 

On the other hand, the Kenyan shilling depreciated by 0.2 per cent against the US dollar to close the week at Kshs 109.8, from Kshs 109.5 recorded the previous week.

This was mainly attributable to increased dollar demand from commodity and the energy sector importers which outweighed the supply of dollars from exporters.

The pressure on the shilling is a result of new oil orders as the average price of crude remains at $70 a barrel as of the end of last week.