World Bank loan boosts Central bank forex reserves to safety
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World Bank loan boosts Central bank forex reserves to safety after receiving $1billion (Sh139.3 billion)
World Bank loan boosts Central bank forex reserves to safety after receiving $1billion (Sh139.3 billion).
The Kenya shilling received a major boost after receiving $1billion (Sh139.3 billion) World Bank loan to lift the central bank forex reserves.
For the first time in almost six months, Kenya’s foreign exchange reserves are now higher than the required level of four months’ worth of import coverage.
The Central Bank of Kenya (CBK) most current statistics shows that the reserves have reached Sh1.049 trillion ($7.532 billion), or 4.15 months’ worth of import coverage.
The previous week’s foreign exchange cushion was equivalent to 3.62 months’ worth of import covering at Sh857 billion ($6.152 billion).
“This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover,” CBK said in its latest weekly bulletin.
In late November of last year, the cover had fallen below the four-month threshold for the first time since 2015 as a result of rising requirements for servicing foreign debt when the country was unable to get external financing.
The local currency was quoted at Sh139.11 for every one dollar on Friday compared to Sh138.49 per dollar on May 31, indicating high demand for dollars and low supply.
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“The Kenya shilling remained relatively stable against major international and regional currencies during the week ending June 8,” said CBK.
Kenya has in the last several months been caught in a dollar shortage that sent importers hoarding dollars and frantically calling banks for dollars.
This scramble sent the dollar soaring to a high of Sh150 in the market.
This saw the cost of living going up as the prices of food prices hit the ceiling. Kenya imports a major portion of her food requirements making the country very vulnerable to exchange rates.
The prices of fuel, cooking oil, wheat, maize, livestock feeds, machinery and many others have shot up hitting consumers hard.
According to the latest purchasing Managers Index by Stanbic Bank, manufacturers have been stockpiling their inventories due to the volatile currency.
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