This archive report was first published on 5 July 2021.
Kenya's foreign exchange reserves have hit a 12-month high, rising to $9.5 billion as of July 1st, according to data from the Central Bank of Kenya (CBK). This marks the second straight week of gains and the highest level since July 16th, 2020.
As of July 1st, the usable foreign exchange reserves stood at $9,494 million, providing 5.81 months of import cover. This meets the CBK's statutory requirement to maintain at least 4 months of import cover and the East African Community (EAC) region's convergence criteria of 4.5 months of import cover, as stated in the CBK's Weekly Bulletin.
The sharp increase in foreign currency reserves is attributed to recent disbursements from the International Monetary Fund (IMF), the World Bank, and funds from Eurobond IV, according to economists.
The reserves are expected to support Kenya in meeting its foreign debt obligations, provide protection against short-term economic shocks, and help maintain the Kenya shilling's stability against major international currencies.
During the week ending on July 1st, the shilling remained stable against leading regional and international currencies, exchanging at KSh 107.92 per US dollar, compared to KSh 107.77 per US dollar on June 24.
Kenya's overall inflation rose to 6.3% in June, mainly driven by higher food and fuel prices. However, the inflation rate remained within the CBK's target range of 2.5%- 7.5%.
