The Central Bank of Kenya is set to use at least Ksh40.4 billion in a period of four months to buy dollars from commercial banks.
CBK will use $100 million (Ksh.10.1 billion) on a monthly basis from March to June to buy the dollars, in a bid to boost its reserves above normal levels.
In a letter to all Chief Executive Officers of commercial banks, the reserve bank has asked lenders interested in the transaction to make contact.
“This would bolster CBK’s preparedness to deal with the heightened global volatility and uncertainties. Nevertheless, these purchases will be conducted while ensuring that they don’t introduce volatility and instabilities in the foreign exchange market,” noted CBK Financial Markets Director William Nyagaka in the letter.
CBK’s usable foreign currency reserves reduced from Ksh859.4 billion in January to Ksh850.1 billion in February.
CBK had the highest of foreign currency reserves in May 2019 at Ksh1.4 trillion ($13.4 billion) in May of 2019 an equivalent 6.4 months import cover while at their lowest, the buffer sat a low Ksh90.7 billion ($897 million) in December of 2000.
Globally, China has the biggest reserve of foreign currency at Ksh323.5 trillion ($3.2 trillion) followed by Japan and Switzerland at Ksh131.4 trillion ($1.3 trillion) and Ksh85 trillion ($840.3 billion) respectively.