Kenya’s foreign exchange reserves hit a record $10.59 billion, buoyed by diaspora remittances and a stable shilling. This marks a significant increase since surpassing the $10 billion mark in March. The reserves now ensure an import cover of 4.7 months, amid rising loan defaults which indicate ongoing financial strain for many Kenyans.
Kenya has achieved a notable milestone as its foreign exchange reserves have hit a historic high of $10.59 billion. This increase, reported by the Central Bank of Kenya (CBK) in a financial markets update on Thursday evening, encapsulates a $122 million growth in just one week. The upward trend has been steady since March when the reserves initially surpassed the key $10 billion mark. Such numbers indicate a strong economic performance, supported significantly by robust remittances from the diaspora and a stable Kenyan shilling.
This impressive figure of reserves translates to an import cover for 4.7 months, exceeding the East African Community’s recommended minimum of four months. The stability of the Kenyan shilling against the U.S. dollar has been a crucial factor, with this week’s exchange rate at 129.22 to the dollar, slightly improving from last week’s 129.26. This allowed the CBK to build reserves without increasing its interventions in the forex market too frequently.
The rise in forex reserves comes at a time when Kenya is still recovering from a foreign exchange crunch experienced earlier in the year. President William Ruto acknowledged the struggles faced in achieving this growth, noting that the country’s journey to strengthen its reserves has been fraught with challenges over the past year.
Despite the good news, there are underlying concerns as banks report rising loan defaults, now reaching Sh717.5 billion. This financial pressure is spurring banks into more robust recovery efforts, highlighting the ongoing financial strain many residents face. Furthermore, it’s important to recognize that while economic indicators may appear promising, many Kenyans may not feel the real impact of this strengthening economy for some time.
Additionally, the recent performance of the shilling and the overall forex reserves show a notable improvement in the country’s debt outlook, influenced by various factors including policy shifts and a declining dollar. As the CBK continues its review of around 700 applications for licensed digital lenders, it seems that the financial landscape may be shifting toward more inclusive support for various economic players in the coming future.
Kenya’s forex reserves have reached a historic $10.59 billion, marking significant progress amid challenges from a recent foreign exchange crunch. Factors like diaspora remittances and a stable shilling have contributed to this rise, providing a solid buffer for imports. However, despite the positive statistics, many Kenyans may still be feeling the strain from debt and financial instability, underscoring a complex economic environment.
Original Source: eastleighvoice.co.ke
