Kenya's dollar reserves fall as shilling buttressed from U.S. poll shocks

Kenya's foreign exchange reserves have declined to below five months of import cover after the Central Bank moved to cushion the Kenyan shilling from the aftershocks of U.S. election.

The dollar reserves currently stand at 7.54 billion dollars or 4.8 months of import cover, down from 7.63 billion dollars or 5.1 months of import cover early this month, latest data from the regular showed Monday.

It is the first time since April that the dollar reserves have fallen below five months of import cover, with analysts citing the U.S. elections as the cause of the over 90 million dollars decline.

Last week, the Central Bank expressed readiness to forestall the fall of the shilling due to speculative trading caused by U.S. president-elect Donald Trump surprise victory. Dealers confirmed the bank had intervened.

The apex bank normally intervenes in a volatile market by selling or purchasing of dollars, mopping up or injecting local currency liquidity depending on the direction of the shilling.

The shilling has remained relatively stable against the dollar following the U.S. election, closing last week at 101.8 against the dollar, from 101.6 the previous week.

Monday morning, the Central Bank quoted the shilling at 101.7 against the dollar, an indication that it had strengthened from last week's position.

Analysts, however, noted the shilling may not be out of the woods yet.

"This strengthening could be a sign of the shilling being artificially propped-up, and with increased dollar demand from oil importers as well as corporates to meet their foreign dividend obligations, alongside the global market volatility, we may witness short-term weakening on the shilling," said Cytonn, an investment firm based in Nairobi. Endit