Kenya: CBK Says Forex Reserves Adequate Despite Breaching Minimum Target

24 November 2022
Capital FM (Nairobi)
By Susan Nyawira

Nairobi — The Central Bank of Kenya(CBK) has said that its forex reserves remain adequate to smooth out any volatilities despite breaching the aggregate amount of not less than the value of four months' imports.

During the post-Monetary Policy Committee (MPC) briefing, CBK Governor Patrick Njoroge said that the apex bank will still be able to perform its functions such as external government payments of debt, despite the breach.

Njoroge added that the CBK is doing its best to ensure that the reserves are back to the value of four months' imports and that's why they are not stressed.

CBK's foreign exchange reserves currently stand at USD7,038 million (3.94 months of import cover).

This is in breach of the Central Bank of Kenya Act (Section 26) which requires that CBK "at all times use its best endeavours to maintain a reserve of external assets at an aggregate amount of not less than the value of four months' imports as recorded and averaged for the last three preceding years.

The reserves are also in breach of the EAC Monetary Union Protocol, where members to attain and maintain a reserve cover of 4.5 months of imports" calculated in line with the CBK Act.

Njoroge said the CBK is doing its best endeavours even though they are slightly below the target.

"You may be doing your best endeavours but occasionally, there may be moments when the number may be lower than the target," he said.

Njoroge said that for CBK, best endeavours mean that they have looked forward and they expect some inflows.

For instance, he noted that the country is expecting USD443 million (Sh54.1billion) from the International Monetary Fund(IMF) Fourth Review in December and this will buff up the country's foreign exchange reserves.

He disclosed that Kenya is also expected to access a facility of USD400 million (Sh48.9billion) from the World bank by June 2023.

"The programmed inflows give us comfort that we are doing our best endeavours," he said.

Kenya's reserves have been depleting partly because of debt repayments and CBK's intervention to cushion the shilling's depreciation against the dollar.

The currency has weakened about 8 per cent against the dollar this year. The local unit traded at 122.32 units to the US dollar on Thursday evening.

Read the original article on Capital FM.

Tagged:
Copyright © 2022 Capital FM. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 400 reports a day from more than 100 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.