Last week Friday, the Central Bank of Kenya’s foreign exchange reserves fell to $7.858 billion (Sh832.9 billion), which is more than two year low.
The last time such a level was recorded was early March 2018 when the stock of dollars was $7.15 (Sh729.81).
According to the regulator, the reserves have fallen by $900 million since the start of the year and can only cover 4.75 months of import.
However, Central Bank has remained to be optimistic about state activities.
“Usable foreign exchange reserves remained adequate at $7.858 billion,’’ said the bank.
The fall comes at a time when Central Bank has been on the move to sell dollars and mop up shillings in the local market to maintain stability.
The fall of the reserve has been blamed on coronavirus pandemic, which has highly disrupted economies globally, putting pressure on currencies.
“The shilling had remained under pressure since mid-March when the country reported its first case of Covid-19…foreign investor outflows have increased, and CBK has used its forex reserves in a bid to support the shilling,” said AIB capital.
Local currencies are protected by forex reserves during economic shocks, that make investors opt to offload them for stronger and more stable currencies.