News Column

CBK Explains Pressure On Shilling

May 28, 2014

Anthony Langat

THE Central Bank of Kenya attributed the increased pressure on the local currency to seasonal factors as corporations paid out dividends to external shareholders.

The Central Bank said that the phenomenon was not new and has been observed around this period in the previous years.

"The current level of foreign exchange reserves of $6,24bn, equivalent to 4,4 months of import cover, are sufficient to provide adequate cushion against temporary shocks," read a CBK statement.

It added that the proceeds from the debut Eurobond would significantly raise the level of foreign reserves with the exchange rate expected to come under pressure to appreciate in the coming months.

The central bank therefore expected the situation to normalize as the impact of seasonal factors dissipates.

"In the meantime the Bank continues to monitor developments in the market and stands ready to provide support to minimize the volatility of the exchange rate," it stated.

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Source: AllAfrica

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