CBK to start buying the Dollar, Plans to Increase Forex reserves.
The Central Bank of Kenya (CBK) has announced that it will commence buying the US dollars in order to progressively increase its foreign exchange reserves above the normal levels. This would bolster CBK’s preparedness to deal with the heightened global volatility and uncertainties.
In a statement sent to commercial banks this morning, CBK’s director for financial markets development William Nyagoka said, CBK sees an opportunity for such purchases given the developments unfolding in the global markets and economy.
For instance, in 2019, Kenya’s petroleum product imports amounted to USD 3,310 million and the average price of our benchmark oil product was USD 66.5 per barrel. The benchmark price has now fallen to USD 51 per barrel, which portends significant savings.
Nevertheless, these purchases will be conducted while ensuring that they do not introduce volatility and instabilities in the foreign exchange market.
CBK will be looking to purchase from commercial banks up to USD 100 million each month from March to June 2020. The minimum amount for these purchases will be USD 1 million, and will be transacted at the prevailing market rate and at CBK’s discretion.
Commercial banks interested in conducting these transactions have been advised to contact CBK in the usual manner.