Kenya's US Dollar Reserves Surpass KSh 1 Trillion as CBK Adds KSh 31 Billion

 

Kamau Thugge is the governor of the CBK 

The Central Bank of Kenya (CBK) has further increased the country's foreign exchange (forex) reserves. Kamau Thugge is the governor of the CBK. Kenya shilling banknotes have been used for illustration.  In the latest data, CBK indicated that it now holds US dollar reserves sufficient to cover 4.4 months of imports. CBK is required to hold forex reserves sufficient to cover at least four months of imports. 

"The usable foreign exchange reserves remained adequate at USD 8,491 million (about KSh 1.1 trillion) (4.4 months of import cover) as of October 17. This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover," CBK reported.  Notably, Kenya’s forex reserves have grown for six consecutive weeks, with the latest report indicating a growth of USD 244 million (about KSh 31 billion) from the USD 8,247 million (about KSh 1.064 trillion) record set on October 8, 2024. How CBK increased dollar reserves

 In a recent broadcast, the governor of the CBK, Kamau Thugge, explained that the regulator has been making deliberate efforts to increase dollar reserves. Kamau explained that CBK has significantly increased foreign exchange inflows from banks and remittances. He further noted that CBK has also been buying foreign currency from the market to shore up its reserves and moderate market volatility.  "In order to moderate the fluctuations and volatility in the exchange rates, we have indeed been buying foreign exchange (foreign currencies), and that is part of our role, and that is part of our business," Kamau stated in the broadcast. Implications of growing dollar reserves Speaking to TUKO.co.ke, Daniel Kathali, an economist opined that the growing dollar reserves and steady exchange rate are critical in promoting investor confidence.

 Kathali explained that foreign investors want stable markets with low financial risks, as they may lose their investments due to currency volatility. "CBK's efforts in stabilizing the exchange rate have at least resolved one of the factors that would have made investors shy away from these groups. Having adequate forex reserves means Kenya now has the ability to meet its external obligations, such as debt payments and import demands, and there is lower risk of currency shortages or volatility. 

A steady exchange rate significantly reduces the risk of sharp currency depreciations, which can erode foreign investors' investment returns. These factors create a more predictable economic environment, which encourages both foreign direct investment (FDI) and portfolio investment because investors prefer stable markets with lower financial risks," Kathali said. 

by  Elijah Ntongai