Kenya’s foreign exchange reserves rose by about $370 million to $15.25 billion on September 10, reversing three consecutive weeks of declines, according to the Central Bank of Kenya (CBK).
The reserves increased from $14.88 billion recorded on September 3, raising the country’s import cover to 6.3 months from 6.1 months a week earlier.
The latest position remains comfortably above the CBK’s statutory requirement of maintaining at least four months of import cover, providing a buffer for the country to meet its external payment obligations and support stability in the foreign exchange market.
The increase marks a recovery in Kenya’s external liquidity position after reserves declined for three consecutive weeks.
Foreign exchange reserves are a key measure of a country’s ability to meet international financial obligations, including payments for imports and external debt, while also providing a cushion against volatility in global financial markets.
Despite the latest increase, the reserves remain below the record $15.4 billion reached in late July.
The record level was achieved after proceeds from the government’s partial divestiture of its stake in telecommunications operator Safaricom flowed into the country’s foreign exchange reserves.
The latest recovery therefore leaves Kenya only about $150 million below the record level recorded earlier in the year.
The improvement in reserves also comes as the Kenyan shilling continues to trade relatively steadily against the US dollar.
According to CBK data, the shilling traded at an average of 129.44 against the dollar during the week, compared with 129.47 the previous week.
The marginal movement indicates continued stability in the local currency despite global and domestic pressures that can affect foreign exchange markets.
The level of reserves remains an important indicator for investors and businesses because adequate foreign currency holdings help a country meet import requirements and provide confidence in its ability to settle external obligations.
Kenya is heavily dependent on imports for a range of products, including fuel, machinery, industrial inputs and other essential goods. Maintaining sufficient reserves is therefore critical to ensuring that importers can access foreign currency when required.
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