NAIROBI, June 28 (Xinhua) -- Kenya's foreign exchange reserves have declined by 154 million U.S. dollars in three weeks as the Central Bank sold dollars to buttress the shilling, which is under pressure from international currencies.
The dollar reserves have fallen from 8.26 billion dollars at the end of May, or an equivalent of 5.46 months of import cover, to 8.11 billion dollars at the end of last week, Central Bank of Kenya (CBK) data showed Wednesday.
At the beginning of May, the dollar reserves had peaked at 8.3 billion dollars or 5.49 months of import cover but have been on a downward trend since then.
The forex reserves stood at 8.19 billion dollars or 5.42 months of import cover in the first week of June, then fell to 8.18 billion dollars or 5.41 months of import cover mid this month before further dropping to reach the current level.
During this period, the Kenya shilling has been under pressure due to rise in dollar demand from retail importers and multinationals paying dividends to foreign shareholders.
On Tuesday, the local currency went down against the dollar to stand at an average of 103.70 from 103.60 last Friday when it had stayed unchanged for the better part of the week.
Analysts attributed the fall to intense demand of dollars by oil importers seeking to meet end-month purchases.
Normally, the Central Bank sells dollars to prop up the local currency from falling to levels that would destabilize the money market.
Last week, the Kenya shilling depreciated 0.1 percent against the dollar due to high dollar demand from oil importers and global strengthening of the dollar, according to analysts.
They, however, noted that the shilling would remain steady against the dollar in the short term due to the large foreign exchange reserves held by the Central Bank as it can sell them to support the currency.
