Kenyan currency at all-time low as foreign reserves plummet

 

NAIROBI, Kenya, Oct. 24 (Xinhua) -- Kenya's foreign exchange reserves have declined by 66.4 billion shillings (about $615 million) in a month as the Central Bank fights to stabilize it's declining currency amidst a rise in imports.

The reserves plunged from $8.834 billion on Sept. 17 to $8.22 billion dollars on Oct. 22, the apex bank said on Saturday in its weekly report of the financial markets.

The shilling has declined considerably in the past months, hitting an all-time low of 108.8 on Friday against the dollar.

During the period, the apex bank has used its dollar reserves to prop up the currency so that it doesn't fall to levels that destabilize the financial markets.

Kenya's imports are also on an upward trend as business surges after the COVID-19 shutdown.

As Kenya is a net importer of goods that include fuel and industrial raw materials, a weaker shilling means imports become more expensive.

The surge in imports amid low exports means the apex bank has to use more of its dollar reserves to cover for the imports.

But despite the fall in foreign exchange reserves, the Central Bank noted that they are adequate to cover for imports.

"The usable foreign exchange reserves remained adequate at $8.223 million, an equivalent of 4.99 months of import cover. This meets the bank's statutory requirement to endeavor to maintain at least four months of import cover," said the apex bank.