NAIROBI, Kenya, March 13 – Kenya’s forex reserves hit an all-time low last Friday amid a raging dollar crisis in the market which has seen the shilling hit a low of 129 units to the greenback.
According to the latest Central Bank of Kenya(CBK) weekly bulletin, the country’s usable foreign exchange reserves stood at USD 6.56 billion(Sh852.2 billion) as of March 9, equivalent to 3.67 months of import cover.
The reserves fell from USD6.96 billion(Sh900.7 billion) as of February 9, a Sh48 billion drop.
The reserves are in breach of the Central Bank of Kenya Act (Section 26) which requires that CBK “at all times use its best endeavours to maintain a reserve of external assets at an aggregate amount of not less than the value of four months’ imports as recorded and averaged for the last three preceding years.
They are also in breach of the EAC Monetary Union Protocol, where members to attain and maintain a reserve cover of 4.5 months of imports” calculated in line with the CBK Act.
Even so, the CBK maintained that the reserves are adequate.
Kenya’s reserves have been depleting partly as the country navigates external debt repayment obligations coupled with CBK’s intervention to cushion the shilling’s depreciation against the dollar.
The US dollar has soared to a 20-year high forcing central banks across the world to drain reserves in an attempt to stem the depreciation of their currencies.
The shilling hit a record low of 129 to the US dollar last Friday amid a scarcity of the greenback in the market.
The local unit had opened the year at 123.42 to the US dollar shedding about 12 per cent of its value to the dollar year-to-date.
Fuel marketers have in the past week complained of the inability to secure sufficient US dollars and this has seen some petrol stations such as Shell suffer from fuel shortages due to the inability to access their stocks.
The National Treasury has however maintained that Kenya has enough dollars in its reserves despite reports suggesting that the trade currency is extremely scarce.
While appearing before the National Assembly Finance Committee on Friday Treasury Principal Secretary Chris Kiptoo said that figures from the Central Bank show the country has enough dollar supply.
“Most commercial banks in the country have dollars. What’s happening is that those dollars are not being released to the market,” he said.