9 August 2018

Kenya: Central Bank Foreign Reserves Fall to One Month Low

Official foreign exchange reserves have fallen to a one-month low as inflows thinned slightly towards the end of July.

Official data from the Central Bank of Kenya (CBK) showed that the reserves stood at $8.761 billion (Sh880.2 billion) as at August 2 compared to $8.857 billion (Sh889.86 billion) on July 5 -- $96 million or Sh9.65 billion lower.

However, most of the decline happened within the last week of July when the reserves fell by $71 million or Sh7.1 billion.

While the CBK did not explain what had caused the decline, market players said that they noted thin forex inflows as of Monday while there was also increased demand for the dollar.

"Resurgent dollar demand pushed the US dollar-Kenya Shilling pair up in early session while the foreign currency inflows that previously offered support to the local unit thinned out leaving the home unit exposed," said the Commercial Bank of Africa in a market update.

Others said the monetary authority had used cash in intervening to inject Kenya shilling liquidity into the market in view of the tightness experienced in the course of last week.

Genghis Capital noted that the shilling had traded in a tight band supported by remittances and agricultural inflows.

Yesterday, the shilling was exchanging at an average of 100.35, little changed through the week having opened at the same level on Monday.


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