CfC Stanbic Bank, Regional Economist, Jibran Qureishi. FILE PHOTO | NMG
Kenya’s foreign exchange reserves have fallen to a three-month low on increased dollar outflows.
The shilling has also been hit hard, sliding to a six-month low against the greenback on Tuesday.
The forex reserves dropped to $7.92 billion (Sh823.04 billion) or an equivalent of 5.23 months of imports cover on July 6.
This is the lowest since March 30 when they stood at $7.73 billion (Sh803.30 billion) or 5.11 months of import cover.
Regional economist at Stanbic Bank
,
Jibran Qureishi attributed the drop to semi-annual $90 million
(ShSh9.35 billion) coupon payment on $2.75 billion Eurobond, dividend
payment season, increased maize and sugar imports, and a slowdown in tea
receipts.
“What we normally see in June is that
there’s a confluence of risks for reserves… because generally the dollar
demand is usually high.
If you look at the
fundamentals of the balance of payment right now, there’s a slowdown in
tea receipts and, at the same time, there’s a bit of elevated demand
(for dollar) because there’s importation of maize and sugar going on,”
Mr Qureishi said.
The $986.9 million (Sh102.55
billion) loan from the Chinese government, $800 million (Sh83.13
billion) syndicated commercial loan and $450 million (Sh46.76 billion)
loan from the Preferential Trade Area and African Export Import Bank had
helped lift reserves to a historic high of $8.31 billion (Sh863.57
billion) in April 27.
This was from a low of $6.97 billion (Sh724.32 billion) on March 16.
They
have since fallen by about $390 million (Sh40.53 billion) or 4.69 per
cent but still are within the statutory requirement of four months of
import cover and 4.5 of the East African Community preference.
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