KENYA’S foreign exchange reserves have surged by $191 million this week, hitting a seven-week high of $9.2bn, according to the Central Bank of Kenya (CBK). The boost, announced in the CBK’s weekly financial markets update, reverses a downward trend seen since November and strengthens the shilling during the festive season.
Festive season drives reserves growth
The $9.2bn in reserves, equivalent to 4.6 months of import cover, marks an increase from $9.01bn recorded on December 19. CBK attributed the rise to robust inflows from export earnings and diaspora remittances during the holiday period.
Governor Kamau Thugge expects this upward trajectory to continue, with reserves projected to grow by up to $2.23bn by the end of 2024. ‘Stronger remittances, increased export revenues, and IMF disbursements will drive this growth,’ Thugge stated during a monetary policy briefing in Nairobi earlier this month.
IMF and export boost
Kenya’s forex reserves received a significant boost in November with a $605 million disbursement from the IMF under a funding programme that runs through April 2025.
Exports have also surged by 12 percent in the first ten months of 2024, spurred by increased shipments of tea, vegetables, and fruits. At the same time, diaspora remittances reached a record $4.01bn, reflecting eased inflation in key source markets like Europe and the United States.
Stabilising the shilling
The strengthened reserves have provided much-needed stability to the Kenyan shilling, which appreciated to an average of 129.29 against the US dollar, up from a low of 130.
‘The usable foreign exchange reserves remain adequate at $9.2bn, meeting the statutory requirement to maintain at least four months of import cover,’ the CBK noted.
This financial buffer ensures Kenya’s ability to support the shilling and manage external obligations, offering a positive outlook for the country’s economic stability heading into 2025.
