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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenyan dollar reserves fall slightly as shilling weakens 

NAIROBI (Xinhua) -- Kenya’s foreign exchange reserves have dropped slightly last week as the shilling faced pressure following increased demand of U.S. dollars by oil importers.

The reserves fell from 7.02 billion dollars, an equivalent of 4.64 months of import cover, to 6.97 billion dollars or 4.61 months of import cover, data from Central Bank of Kenya showed Tuesday.

The drop of about 54 million dollars indicated that the apex bank last week had to buttress the shilling from falling further by selling dollars.

Normally, the Central Bank sells dollars to prop up the local currency from falling to levels that would destabilize the money market.

Tuesday, the bank quoted the shilling at 103.1 against the dollar and a 127.7 against the British Pound, this was a drop of 0.08 percent and 0.37 percent respectively.

However, according to analysts, the currency was stable during the Tuesday trading following an almost equal demand and supply of dollar inflows.

The Kenya shilling depreciated by 0.4 percent against the dollar last week to close the week at 103 compared to 102.6 recorded the previous week on account of heightened dollar demand from oil importers.

The level of forex reserves had stabilized for weeks at 7 billion dollars, an indication of the confidence of the Central Bank had with the level of the shilling.

The bank’s monetary policy committee is meeting next week and is likely to take measures to protect the shilling, analysts noted.

             

 

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