The Central Bank of Kenya (CBK) reports that its official foreign exchange reserves have risen back above the prescribed lower limit of an equivalent of four months’ import cover.
According to the New data from the CBK, dollar-denominated cover rose by Ksh.56.9 billion ($462 million) last week to an equivalent 4.22 months import cover.
CBK statutory requirements require the reserve bank to keep foreign currency reserves equivalent to at least four months of the country’s import demand.
A biting foreign debt payments coupled with high interest rates have increased pressure on Kenya’s foreign currency cover.
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Consequently,CBK has deployed the foreign currency reserves to defend the local unit by selling dollars from the vault to minimize volatility resulting from the increased demand for the green buck by importers and merchant traders.
CBK official foreign reserves fell below the four months’ import cover in late November for the first time since 2015 before the recent rebound.
According to the IMF, Kenya has revised down its foreign reserves targets on the back of tighter global financing conditions which has seen it miss out on planned external financing severally over the past year.