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Kenya's foreign exchange reserves hit six months low

18 May 2015, 21:36

Nairobi - Kenya's foreign exchange reserves hit six months low as the shilling continues to lose against world major currencies.

The reserves, according to latest Central Bank of Kenya (CBK) figures received Monday, stand at 6.76 billion U.S. dollars.

The last time the reserves were at such a low was in mid December last year, where they stood at 6.73 billion dollars.

Interventions by the CBK had seen the dollar reserves hit a peak of 7.3 billion dollars at the beginning of March before starting to fall again to the current level. Between March 5 and last week, Kenya has witnessed a drop of 538 million dollars in the reserves.

Analysts have blamed the decline to the little inflows from Kenya's main sources of foreign exchange that include horticulture and tourism, which has been hit badly by increased terror attacks from the Somali-based militant group, the Al-Shabaab.

Also read: Uhuru Kenyatta asks Burundian president to postpone poll

In the first quarter of this year, the East African nation earned 202 million dollars from exporting 34,822 metric tones of cut flowers. During the same period last year, the country earned 213 million dollars from 31,170 metric tones of cut flowers.

Similarly, Kenya received 177,085 tourists through its two main airports in Nairobi and Mombasa, which was a 31 percent decline compared to the same period last year, Kenya National Bureau of Statistics (KNBS) showed last week.

The drop in the number of tourists signals a decline in earnings from the top foreign exchange earner that used to give Kenya billions of dollars annually. Kenya, therefore, has to rely on other sources of earnings that include export of goods to East African nations, mainly Uganda.

A decline in foreign exchange reserves means the CBK cannot effectively save the shilling when it is facing increased pressure from international currencies as it is doing now.

The shilling last week weakened against world major currencies that include the U.S. dollar and the Sterling Pound. The local unit closed the week exchanging against the dollar at an average of 96.5 and against the Sterling Pound at 151.4, according to the CBK.

The shilling has also lost ground against the regional currencies. Last week it weakened against the Tanzania and Uganda shillings and the Rwanda and the Burundi francs. Enditem

- Xinhua

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