Kenya’s Central Bank to Buy Dollars From Commercial Banks
The Central Bank of Kenya announces that it will commence buying of US dollars in order to progressively increase its foreign exchange levels above normal levels. CBK says the move will increase its preparedness to deal with the heightened global volatility and uncertainty.
The move saw the Kenya Shilling lose ground against the dollar to hit 102.3800 per US Dollar from KSh 100.93 per US Dollar on close of last week (February 27).
In this case, CBK looks to purchase up to USD100 million each month from commercial banks from March to June 2020. The minimum amount for these purchases will be USD 1million and will transact at the prevailing market rate and at CBK’s discretion.
However, CBK will take precautions to ensure that the purchases do not introduce volatility and instabilities in the foreign exchange markets.
CBK weekly bulletin for the week ending February 28 shows that usable foreign exchange reserves remained adequate at USD 8,409 million (5.11 months of import cover) as at February 27 from USD 8,500 (5.16 months import cover) as at January 30.
In addition, the bulletin shows that remittance inflows increased to USD 259.4 million in January 2020 from USD 250.3 million in December 2019. The cumulative inflows in the 12-months to January 2020 increased to USD 2,811 million compared to USD 2,733 million in 2019, reflecting a growth of 2.8 per cent.