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Kenya's forex reserves hit record 8 bln USD on inflows from external lenders

Xinhua, April 10, 2017 Adjust font size:

Kenya's gross foreign exchange reserves rose to a new high of over 8 billion U.S. dollars, boosted by inflows from external lenders.

New data from the Central Bank of Kenya (CBK) show Monday that the reserves now stand at a record 8.03 U.S. dollars, or an equivalent of 5.3 months of import cover.

This is an increase of 295 million dollars in the last week as the government continued to draw foreign loans from several lenders, including commercial banks.

At the end of last month, the East African nation's foreign exchange reserves stood at 7.73 billion dollars, or an equivalent of 5.11 months of import cover.

The Treasury over a week ago announced that it was borrowing 800 million dollars in syndicated loan from four international banks and 500 million dollars from the African Export-Import Bank (Afreximbank).

Besides the loans, Kenya also had a precautionary arrangement with the International Monetary Fund, equivalent to 1.5 billion dollars.

"The increase is largely due to inflows of planned external loans of the government. These reserves continue to provide an adequate buffer against short-term shocks," said CBK Governor Patrick Njoroge at the end of last month, when the benchmark lending rate was kept at 10 percent.

The Kenyan shilling last week was under pressure from foreign currencies, weakening 0.4 percent to close against the U.S. dollar at 103.4.

However, CBK data indicated that the bank did not intervene in the money market by selling dollars from its reserves.

Analysts expect that the shilling would come under intense pressure due to global strengthening of the dollar following a planned rate hike and recovery of global oil prices.

"However, with the current level of forex reserves, the CBK will be able to support the shilling in the short term," Cytonn, a Nairobi-based investment firm, said Monday. Endit