Kenya Says Reserves Can Cushion Shilling Volatility
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Kenya has more than $13 billion in foreign exchange reserves, Central Bank Governor Kamau Thugge said on Thursday, adding that the buffer should be sufficient to manage any currency volatility linked to the Middle East conflict. He said the central bank had built up reserves specifically to prepare for shocks such as slower export growth, weaker remittances and lower tourism receipts.
The shilling weakened about 0.7% against the dollar in March after the U.S. and Israel launched strikes on Iran, but it recovered most of those losses on Wednesday after U.S. President Donald Trump announced a two-week ceasefire with Iran. The central bank also kept its key lending rate unchanged on Wednesday as it watches for second-round effects from the surge in global energy prices.
Thugge said the reserves were meant to provide confidence that Kenya could handle external pressure without destabilizing the currency. The message from the central bank was that the country has enough room to absorb the shock while it monitors the wider economic fallout.
