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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenya’s dollar reserves fall on importers’ demand

NAIROBI (Xinhua) -- Kenya’s foreign exchange reserves have declined to eight months low as retail importers’ demand for U.S. dollars surges.

The dollar reserves, according to data from Central Bank of Kenya Monday, fell last week to a new low of 7.14 billion U.S. dollars or an equivalent of 4.7 months of import cover.

The drop was a decline of 71 million dollars, the biggest in recent times, highlighting the huge demand for dollars in the East African nation. The previous week, the forex reserves declined by 60 million dollars.

The huge demand for dollars, which has put pressure on the shilling, has been attributed to the successful conclusion of Oct. 26 repeat elections.

Conclusion of the polls has seen importers, including manufacturers and oil traders, demand more U.S. currency to bring in merchandise.

Most of the traders, according to analysts at Cytonn, a Nairobi-based investment firm, had initially adopted a wait-and-see attitude due to political uncertainty over elections.

Kenya was thrown into political uncertainty following the annulment of the Aug. 8 presidential election by the Supreme Court, which called for fresh polls in 60 days. Fresh elections were called on Oct. 26 but the opposition boycotted them.

The last time Kenya’s dollar reserves hit such low level was in mid March when they stood at 7 billion dollars or 4.6 months of import cover.

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EARLIER REPORT:

Kenya shilling firms against the dollar on rising inflows

NAIROBI (Xinhua) -- The Kenya shilling began the week stronger on Monday, going up against the U.S. dollar as inflows from various sectors, including agriculture, rose.

The shilling traded at an average of 103.67 to the dollar, up from 103.70 in the previous session on Friday.

The Central Bank of Kenya placed the local unit at 103.66 against the greenback, up from last Friday’s 103.74.

On the other hand, commercial banks in the east African nation placed the currency at between 103.60 and 103.80 against the dollar.

Traders at financial institutions attributed the firming of the shilling to inflows from various sectors which helped to offset increasing demand of dollars from retail importers, in particular manufacturers and oil traders.

According to the apex bank, the Kenya shilling exchange rate remains relatively stable against the dollar and the British Pound, which it exchanged at 135.74 on Monday.

The bank attributed the firming against the pound to the Bank of England’s decision last week to raise interest rate for the first time in over a decade.

Kenya has foreign exchange reserves that stand at 7.1 billion dollars, an equivalent to 4.7 months of import cover, which is sufficient to support the shilling.

             

 

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