Foreign exchange reserves held at the Central Bank of Kenya last week rose to their highest level in 12 months, data from the central bank showed on Friday. The reserves surged by $1.38 billion in the past week to $9.5 billion, the second straight week of gains and the highest level since 16th July 2020.
“The usable foreign exchange reserves remained adequate at USD 9,494 million (5.81 months of import cover) as at July 1st. This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover,” CBK said in its latest Weekly Bulletin.
Economists attribute the sharp increase in foreign currency reserves to recent disbursements from the IMF, World Bank, and funds from Eurobond IV.
The reserves are expected to assist Kenya in meeting its foreign debt obligations, offer protection against short term economic shocks, and support the Kenya shilling from declining against major international currencies.
According to CBK data, the shilling remained stable against leading regional and international currencies during the week that ended on 1st July, exchanging at KSh 107.92 per US dollar on July 1, compared to KSh 107.77 per US dollar on June 24.
Kenya’s overall inflation rose to 6.3% in June, mainly pushed up by higher food and fuel prices. The overall inflation, which increased from 5.9% in May, stayed within CBK’s target range of 2.5%- 7.5%.