Central Bank of Kenya significantly boost its foreign exchange reserves with $1.632 billion Eurobond cash

Kenya’s foreign exchange reserves now stands an all-time high of $8.83 billion (Sh894.6 billion), largely due to the dollar purchase from Treasury.

Treasury principal secretary Kamau Thugge said Monday that $1.632 billion had been sold to the central bank and the equivalent (Sh165.3 billion) credited into the Exchequer account in readiness for disbursement to intended projects.

“We sold the sovereign bond dollar proceeds to the CBK and they gave the Treasury the shilling equivalent, the same process we followed last time (in 2014). The contribution to CBK’s international reserves was $1.632 billion after netting off some syndicated loans for $366.2 million,” Dr Thugge said.

The CBK said in its monetary policy committee statement Monday that the dollars it has added to its reserves will provide additional cover for the shilling against exchange rate shocks.

“The CBK foreign exchange reserves are at an all-time high of $8.832 billion (5.9 months of import cover), up from $7.089 billion (4.7 months of import cover) in January 2018, and continue to provide an adequate buffer against short term shocks in the foreign exchange market,” said CBK in the MPC release.

Kenya last month issued a $2 billion (Sh202 billion) Eurobond and has since used $366.2 million (Sh37 billion) to settle part of syndicated loans that were due for payment.

Some of the banks that lent Kenya $1.65 billion (Sh167 billion) had held the option of calling in the debt early once the sovereign bond was issued.

Attention now turns to Treasury secretary Henry Rotich, who is expected to offer finer details of how the Eurobond cash will be disbursed to various ministries and government agencies.

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