This archive report was first published on 17 June 2020.
Kenya's forex reserves have been a key factor in stabilizing the shilling, providing a sufficient buffer against external shocks. As of June 11, the reserves stood at KSh 989 billion (USD 9.302 million), offering 5.59 months of import cover.
This is above the statutory requirement of maintaining at least four months of import cover and the East African Community's convergence criteria of 4.5 months of import cover, according to the Central Bank of Kenya (CBK).
Despite the easing of coronavirus restrictions, which is expected to increase demand for US dollars, the CBK's governor noted during a Monetary Policy Committee meeting that remittances may decline by 12 percent in 2020.
However, the high level of forex reserves will provide a sufficient shield to protect the shilling from external shocks in the short term.
On June 11, the shilling remained stable against major international currencies, exchanging at KSh 106.60 per US dollar, KSh 136.32 per British Pound, and KSh 121.26 per Euro.
The Treasury bills auction of June 11 received bids totalling KSh 69.7 billion against an advertised amount of KSh 24.0 billion, representing a performance of 290.5 percent. The CBK accepted KSh 22.87 billion.
