The Central Bank of Kenya (CBK) increased its foreign exchange reserves by an extra Sh5.5 billion ($55 million) last week, suggesting more ability to fight future weakness in the local currency.
The usable reserves stood at $8.846 billion (Sh892 billion) compared to $8.791 billion (Sh887 billion) the previous week.
Two weeks ago, the shilling got a boost when reserves sharply rose to $8.831 billion (Sh891 billion) from $7.155 billion (Sh722 billion) after the Treasury raised a Eurobond – which in turn improved the import cover to six months from just below five months.
The CBK did not explain last week’s increase in reserves, but early in the course of the period the shilling appreciated against a number of foreign currencies but later weakened against others.
The initial appreciation trend was linked to the higher amount of reserves as well as the confirmation of a Sh151 billion ($1.5 billion) facility by the International Monetary Fund (IMF). The IMF said the cash would be tentatively be available pending the review of the economic reforms by September.
Last Thursday, Commercial Bank of Africa said in its daily report that the shilling rally had stalled, but saw it holding steady after that. It attributed this to end-of-the-month return by importers to the market.
“The home unit was a tad lower versus the greenback at the closing bell, trading within the 100.30–101.30 band as activity on the demand counter tipped the scale in favour of shilling bearers,” the bank said last Thursday.
Source: Business Daily