Kenya forex reserves drop Sh43.9bn on global pressures

NAIROBI, Kenya, Apr 12 – Kenya’s foreign exchange reserves fell by Sh43.9 billion in the week to April 9, reflecting rising external pressures linked to higher global energy prices and supply chain disruptions.

Data from the Central Bank of Kenya shows reserves declined by $340 million to $13.316 billion (Sh1.72 trillion), equivalent to 5.7 months of import cover, down from $13.656 billion the previous week.

The drop comes amid escalating geopolitical tensions in the Middle East, which have driven up global oil prices and increased import costs for oil-dependent economies such as Kenya.

Despite the decline, CBK said reserves remain above the statutory minimum of four months of import cover, providing a buffer against external shocks.

The central bank recently held the benchmark lending rate at 8.75 percent, maintaining a cautious stance as it monitors inflation risks tied to rising fuel prices.

The Kenya shilling remained relatively stable during the period, trading at about Sh129.53 against the US dollar, supported by adequate reserves and central bank interventions.

Liquidity in the money market also remained sufficient, with commercial banks holding excess reserves above regulatory requirements, while interbank rates stayed stable.

In the government securities market, Treasury bill demand remained strong, with the latest auction slightly oversubscribed, pointing to sustained investor appetite.

Globally, oil prices continue to rise amid uncertainty around key shipping routes such as the Strait of Hormuz, adding pressure on import-dependent economies.

CBK said the current monetary policy stance remains appropriate to anchor inflation expectations and support exchange rate stability in the near term.