Forex Reserves Decline by KSh38.4bn in October on High Import Bills

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

Kenya’s foreign exchange reserves declined by KSh38.4billion in October, the Central Bank data shows.

The country’s dollar reserves currently stand at $9.175billion ( KSh1.02trillion), according to the CBK latest weekly bulletin. This is equivalent to 5.6-months of import cover.

In the months of June and July, the reserves were boosted by USD 407.0 million IMF disbursement and USD 130.0 million World Bank loan financing received in June 2021 and the USD 1.0 billion proceeds from the Eurobond issued in July 2021 respectively.

In addition, improved diaspora remittances evidenced by an 18.8 per cent y/y increase to USD 309.8 million in September 2021, from USD 260.7 million recorded over the same period in 2020.

Kenya Shilling

This has helped to cushion the shilling against further depreciation. In October, the currency depreciated by 0.7 per cent against the US Dollar to close the month at Kshs 111.2, from Kshs 110.5 recorded at the end of September 2021, mostly attributable to increased dollar demand from energy and merchandise importers.

“On a YTD basis, the shilling has depreciated by 1.9% against the dollar, in comparison to the 7.7% depreciation recorded in 2020,” Cytonn Investments state.

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