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Forex reserves hit 9-month low

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Customers at a forex bureau in Nairobi. FILE PHOTO | NMG 

Official foreign exchange reserves fell by Sh35.5 billion ($344 million) in a month to hit the lowest level in nine months, data from the Central Bank of Kenya (CBK) shows.

Last week alone, the reserves fell by Sh9.2 billion ($89 million) to stand at Sh831.30 billion ($8.063 billion) compared to Sh840.47 billion ($8.152 billion) the previous week.

The last time reserves stood at lower than this figure—that is $7.155 billion or Sh737.68 billion—was in the week ending March 8.

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Soon after this, they sharply jumped to Sh910.48 billion or $8.831 billion after Kenya floated a Sh200 billion Eurobond that was oversubscribed in the international markets.

The latest reserves represent 5.34 months of import cover, one month lower than at the highest level this year.

As at April 26, the reserves covered 6.36 months of imports, with the actual amount standing at Sh980.38 billion or $9.509 billion.

The CBK normally does not disclose its purchases or sales from the market but has lately been put under pressure by the International Monetary Fund (IMF) to begin making public disclosure of its activities with regard to foreign exchange.

The IMF’s position was that the currency’s value is only partly determined by market forces and could possibly be weaker if it was left fully to such forces.

The World Bank has also expressed similar sentiments — that the currency is overvalued due to limited determination by market forces — in the past.

Besides sales and purchases, the CBK uses the forex in repaying foreign currency-denominated debt on behalf of the Treasury or in completing transactions in state-to-state deals.

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