Central Bank of Kenya (CBK) has revealed plans to buy $400 million US dollar currency in a bid to grow the country’s foreign currency reserves above normal levels.
CBK wrote to the CEOs of local commercial banks expressing its intention to buy US dollars and urged those (lenders) interested in the transaction to contact the bank.
The bank’s regulator said it intends to purchase 100 million American dollars per month between March and June, Citizen Digital reported.
“This would bolster CBK’s preparedness to deal with the heightened global volatility and uncertainties,” a letter by CBK Financial Markets Director William Nyagaka to bank CEOs states.
“Nevertheless, these purchases will be conducted while ensuring that they don’t introduce volatility and instabilities in the foreign exchange market.”
Usable foreign currency reserves held by CBK declined from Sh859.4 billion in January 2020 to Sh850.1 billion in February.
In May 2019, CBK had Sh1.4 trillion ($13.4 billion) in reserve foreign currency, the highest ever. This was an equivalent of an import cover of 6.4 months.
China holds the largest reserve of foreign currency in the world at $3.2 trillion followed by Japan ($1.3 trillion) and Switzerland $840.3 billion.