Kenya's foreign exchange reserves plummet as shilling hits new low

The shilling concluded the week at 147.36 against the dollar, marking a historic low, according to the bank. Over the past year, the local currency has witnessed a 22 percent decline against the dollar, and the Central Bank has faced challenges in stabilizing it due to dwindling forex reserves.

Nevertheless, the bank emphasized that despite the decrease, the foreign exchange reserves continue to be adequate for covering the country's import needs and supporting the local currency. "The reserves meet the statutory requirement to endeavor to maintain at least four months of import cover," said the apex bank.

On Sept. 14, the bank issued an order to firms remitting money abroad, limiting them to selling no more than 100,000 dollars to individual buyers per day unless they transact through commercial banks, a measure aimed at protecting the reserves.

Central Bank Governor Kamau Thugge attributed the shilling's decline and the decrease in reserves, in part, to the increase in benchmark interest rates in the United States.