NAIROBI, Kenya, Jan 28 – Kenya’s foreign exchange market has remained stable, supported by the narrowing of the current account deficit and balanced flows.
A finding by Central Bank of Kenya shows that current account deficit, which is the balance of foreign exchange inflows and outflows as a percentage of gross domestic product (GDP), narrowed to an estimated 4.6 percent of the GDP in 2019 from 5.0 percent in 2018.
This was mainly due to lower imports of Standard Gauge Railway related equipment, resilient diaspora remittances and strong receipts from transport and tourism services.
Over the last one-year, Central Bank has been revising downwards the projected current account deficit.
In 2019, Diaspora remittances was the biggest contributor of foreign exchange inflows, with Kenyans living abroad sending home an average of Sh23.3 billion every month.
On the imports counter, the biggest fall in nominal terms was in food imports, which declined to Sh171.2 billion in the nine months to September 2019 compared to a similar period in 2018.
During the period, machinery and transport equipment imports fell to Sh436 billion, chemicals fell by Sh10.8 billion and manufactured goods dropping to Sh288.2 billion.
Going forward, CBK projects the current account deficit to remain stable at 4.7 percent of GDP in 2020.