Kenya’s foreign exchange reserves posted an improved performance from the previous week to Ksh.884.2 billion, according to the latest data by the Central Bank of Kenya (CBK).
This is a 2.4 percent performance compared to Ksh.863.2 billion it posted the previous week.
The import cover signifies 3.63 months of import cover but falls below the 4.5 months threshold of the East African Community.
“This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover,” said CBK.
Import Cover measures the number of months of imports that can be covered with foreign exchange reserves available with the central bank of the country – says the IMF.
In East African Community, the threshold has been set at 4.5 months as essential for the stability of a currency.
The dwindling in reserves has a ripple effect on the local currency, which has continued to feel the pinch against the dollar.
In the week to April 24, 2023, the Shilling dropped by 0.7 percent against the US dollar to Ksh 135.4, from Ksh.134.4.
Pressure on the shilling is coming from importers, especially oil and energy sectors.
On a year-to-date basis, the shilling has depreciated by 9.5% against the dollar, adding to the 9.0% depreciation recorded in 2022.