Kenya’s foreign exchange reserves fell 222 million U.S. dollars (25 billion shillings) this week as the Central Bank released dollars into the market to buttress the local currency, a report on the financial markets released Friday evening showed.
The Central Bank of Kenya (CBK) in the weekly update said the reserves fell from 9.09 billion dollars, an equivalent of 5.56 months of import cover, to 8.87 billion dollars, or 5.42 months of import cover.
During the period, the shilling hit its lowest level ever against the dollar, exchanging at 112.1, from 111.1 in the week ending November 12.
The local currency has been under pressure since the start of the month as dollar inflows from key exports like tea and horticulture fall amid high demand for foreign currencies for oil, machinery and capital equipment exports.
A weak shilling normally leads to costly imports as more units of the local currency are needed in the trading process.
The shilling similarly fell against the other major global currencies including the Pound Sterling and the Euro.
Despite the decline in dollar reserves, the apex bank, however, said the 8.87 billion dollars are adequate.
“This meets the CBK’s statutory requirement to endeavor to maintain at least four months of import cover, and the East Africa Community’s region’s convergence criteria of 4.5 months of import cover,” said the apex bank.