Kenya’s foreign exchange reserves have declined to eight months low as retail importers’ demand for US dollars surges.
The dollar reserves, according to data from Central Bank of Kenya Monday, fell last week to a new low of US$7.14 billion U.S. dollars or an equivalent of 4.7 months of import cover.
The drop was a decline of US$71 million, the biggest in recent times, highlighting the huge demand for dollars in the country. The previous week, the forex reserves declined by US$60 million.
The huge demand for dollars, which has put pressure on the shilling, has been attributed to the successful conclusion of October 26 repeat elections.
Conclusion of the polls has seen importers, including manufacturers and oil traders, demand more U.S. currency to bring in merchandise.
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Most of the traders, according to analysts at Cytonn, a Nairobi-based investment firm, had initially adopted a wait-and-see attitude due to political uncertainty over elections.
Kenya was thrown into political uncertainty following the annulment of the August 8 presidential election by the Supreme Court, which called for fresh polls in 60 days. Fresh elections were called on October 26 but the opposition boycotted them.
The last time Kenya’s dollar reserves hit such low level was in mid March when they stood at US$7 billion dollars or 4.6 months of import cover.
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