CBK Dollar Reserves Jump On New IMF Flows

 

By Kepha Muiruri For Citizen Digital

The Central Bank of Kenya (CBK) store of foreign currency went up by Ksh.29.5 billion at

the end of last week on the back of new disbursements from the International Monetary Fund (IMF).

The rise in the official foreign exchange reserves has coincided with the disbursement of Ksh.29.2 billion ($258.1 million) by the IMF on December 17.

The stock of the largely dollar-denominated reserves now stands at Ksh.997.5 billion (($8.817 billion) and represents 5.39 months of import cover for the country.

The new flows by the IMF serves to replenish CBK’s FX buffer which has recently been under pressure from increased dollar demand forcing the reserve bank to sell some dollars from its holdings to correct the imbalance.

The increased demand for the green buck has packed pressure on the local unit which continues to trade at historical lows at the start of 2022.

The local unit was quoted at Ksh.113.15 against the US dollar at the close of trading on Monday in contrast to Ksh.113.13 on December 31.

Analysts have tied the sustained demand for dollars to merchant importers who presently face higher import costs particularly on commodities such as oil.

The greater demand for dollars has outstripped the local supply of the green buck despite constant inflows of foreign currency from sources such as diaspora remittances.

Even so, the CBK has continued to rate the performance of the shilling as stable against major international and regional currencies insisting it would only intervene in the case of volatility.

Across 2021, the shilling shed 3.6 per cent of its value against the US dollar.