The Kenyan shilling is on a downward spiral against the US dollar, for which Kenya needs to use the US dollar to ease the exchange rate.

(AFP)

[Financial Channel/Comprehensive Report] As the Kenyan shilling continued to plummet against other major currencies around the world, Kenya's US dollar reserves fell to the lowest level in eight years. The country in East Africa is facing a severe foreign exchange crunch.

"QUARTZ" reported that according to the foreign exchange reserve policy of the East African Community (EAC), member states must have foreign exchange reserves of at least 4 months at any time, subject to imports.

Kenya has been below regulatory levels since January 26.

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Kenya's central bank revealed that the country's available foreign exchange reserves now stand at US$6.6 billion (NT$202.7 billion), down from the US$6.9 billion (NT$211.9 billion) reported last month.

The US$6.6 billion can only maintain Kenya's import guarantee for 3.69 months.

While the Bank of Kenya believes that reserve levels are sufficient to meet statutory requirements, the severe shortage of dollars is still hitting importers hard and fueling local inflation and the cost of living.

As of Tuesday (7th), the convertible shilling of one dollar has risen to 127.8 from 125.6 in mid-February. Since February 2020, the Kenyan shilling has shrunk by 27%.

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