Kenya’s forex reserves declined 21 billion shillings (about 171 million U.S. dollars) this week, worsening the country’s dollar crisis, the Central Bank of Kenya said in its update of the financial markets, The fall in reserves is attributed to import payments and a decline of the shilling that stood at the lowest level (138) against the dollar..
The reserves declined from 6.468 billion dollars last week, an equivalent of 3.6 months of import cover, to 6.297 billion dollars, or 3.5 months of import cover, said the apex bank, The fall is the sharpest in recent weeks and pushes the import cover to the lowest level in over a decade, according to the apex bank.
The Central Bank uses the forex reserves to support the shilling in case it faces pressure from international currencies. “The usable foreign exchange reserves remained adequate at 6.297 billion dollars meeting the bank’s statutory requirement to endeavor to maintain at least four months of import cover,” said the Central Bank.
To save its dollar reserves and the shilling from decline due to the high demand for the foreign currency by oil importers, Kenya in March entered into a government-to-government deferred payment oil purchase deal with Gulf states. This has helped save the reserves from a sharp decline.
