Kenya’s foreign exchange reserves have increased past the KSh 0.9 trillion (USD 7,088 million) mark, bolstering economic stability and resilience. President William Ruto of Kenya and US dollar bills. Kenya’s forex reserves are dollar-denominated. According to the latest report from the Central Bank of Kenya (CBK), the country’s usable foreign exchange reserves are equivalent to 3.8 months of import cover as of March 27. “The usable foreign exchange reserves remained adequate at USD 7,088 million (3.8 months of import cover) as of March 27. This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover,” read a CBK report. This marks a significant increase from March 14, when the usable foreign exchange reserves were recorded at USD 6,974. Has Kenya resolved liquidity problems? In parallel, Kenya’s money market exhibited continued strength and liquidity, supported by proactive measures such as open market operations. “Liquidity in the money market remained adequate during the week ending March 27, supported by open market operations. Commercial banks’ excess reserves stood at KSh 18.3 billion in relation to the 4.25% cash reserves requirement (CRR)” read the CBK bulletin in part. This surplus liquidity reflects the confidence of financial institutions in the economy’s stability and prospects in recent weeks. Treasury warns Kenya is facing liquidity crisis A few months ago, Treasury Cabinet Secretary Njuguna Ndung’u presented the supplementary budget for FY 2023/24 estimates to the Finance and National Planning Committee, providing further details on the National Treasury’s financial plans. The CS told the committee chaired by Molo MP Kuria Kimani that Kenya was in a tight financial position, leading to a liquidity crisis due to the maturing short-term debts, the depreciating shilling and the high-interest rates on existing loans. The increased confidence and liquidity in the economy can be attributed to the recent resolutions on short-term debts, particularly the Eurobond, and the significant appreciation of the Kenya shilling against the US dollar witnessed over the past six weeks.
by Elijah Ntongai
