According to local reports, the Central Bank of Kenya (CBK) has bolstered its foreign exchange reserves significantly, now amounting to over $7.7 billion, marking a milestone for the country in the last 12 months.
According to the CBK in its Weekly Bulletin for June 21 2024, this reserve level represents an increase in the number of months of import cover, reaching 4.3 months. This surge in reserves reflects Kenya’s proactive approach to strengthening its financial stability and ability to manage external economic pressures effectively.
“The usable foreign exchange reserves remained adequate at USD 8,321 million (4.3 months of import cover) as of June 20 2024. This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover,” CBK reported.
According to a local media outlet, CBK has reinforced its forex reserves with over KES 170 billion between May 31 and June 20 2024 given the Weekly Bulleting provided at the end of May 2024.
“The usable foreign exchange reserves remained adequate at USD 6,975 million (about KES 902 billion) (3.6 months of import cover) as of May 29 [2024]. This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover.”
At the same time, the Kenya Shilling (KES) maintained a steady exchange rate against major regional and global currencies.
“The Kenya Shilling remained stable against major international and regional currencies during the week ending June 20. It exchanged at KES 128.65 per U.S. dollar on June 20, compared to KES 128.46 per U.S. dollar on June 13 [2024],” the apex bank said.
In early 2023, dollar scarcity in Kenya resulted in a 12% drop in value during the previous 12 months. This resulted in the Kenya Shilling trading at KES 147 to the dollar in March 2023.
However, since the start of the year [2024], the Kenya Shilling has appreciated by 17 percent against the dollar making it the best-performing African currency during this period.
The Shilling’s performance is being supported by revenue from agricultural exports and a decrease in dollar demand from importers.
The Kenya Shilling has also been supported by a rise in diaspora remittances. In the first four months of this year [2024], remittances increased by 20 percent to $1.6 billion (KES 205.8 billion), up from $1.34 billion (KES 172.4 billion) during the same period in 2023.
According to CBK Governor, Kamau Thugge, tightening the monetary policy has also helped increase investment inflows into the country.
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