Kenya’s Central Bank foreign exchange reserves have stayed above the Ksh1 trillion mark for the second week in a row partly attributed to a drop in fuel prices globally and the steadying of the Kenyan shilling.
According to the Central Bank of Kenya (CBK), foreign exchange reserves topped USD 8.491 billion (Ksh 1.097 trillion) as of Friday, October 17, from a previous of USD 8,299 (Ksh1.071 trillion).
"The usable foreign exchange reserves remained adequate at USD 8,491 million (about Ksh1.1 trillion) (4.4 months of import cover) as of October 17. This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover," CBK’s statement read in part.
The current usable foreign exchange reserves are sufficient to cover 4.4 months of imports. Central Bank is required to have forex reserves enough to cover at least four months of imports.
CBK Governor Kamau Thugge attributed the growth in foreign exchange reserves to a surge in dollar reserves due to foreign exchange inflows from banks and diaspora remittances.
The CBK has also been actively buying foreign currencies to stabilise the exchange rate thus cushioning the Kenyan shilling as well as increase foreign exchange reserves.
The Kenya Shilling remained stable against major international and regional currencies during the week ending October 17.
In the latest review by Energy and Petroleum Regulatory Authority (EPRA) fuel prices dropped to their lowest level in 19 months resulting into percentage reduction in cost of fuel to end consumer.
"International oil prices decreased during the week ending October 17, partly reflecting easing concerns on the impact of geopolitical tensions, particularly in the Middle East. The price of Murban oil decreased to USD 74.49 (Ksh9,619) on October 17, from USD 78.64 (Ksh10,155) on October 9, 2024," CBK reported.
Prices of fuel have both direct and indirect impacts on inflation as well as the size of the foreign exchange currencies given that the fuel is normally purchased using the dollar.
The dollar exchanged at Ksh129.20 per US dollar on October 17, compared to Ksh129.19 per US dollar the previous week as of October 9.
Less volatile and steady exchange rates are expected to boost investor confidence spurring increased investments into the country and reducing financial risks related to the depreciation of the Kenyan shilling.
Forex reserves have grown over the last six weeks maintaining 4 months' import cover. The latest report indicated a growth of USD 244 million (Ksh31 billion) from the USD 8,247 million (Ksh1.064 trillion) reached on October 8, 2024.
