NAIROBI, March 1 (Xinhua) -- Kenya's foreign exchange reserves dropped by a record 200 million U.S. dollars this week, reaching a four-week low amid the weakening of the shilling, the central bank said in its weekly financial markets update released on Friday evening.
The Central Bank of Kenya (CBK) said that forex reserves stood at 9.05 billion dollars, or 4.6 months of import cover, on Thursday, down from 9.25 billion dollars on Feb. 20.
Forex reserves had reached a high of 9.37 billion dollars on Feb. 13 before beginning a downward trend, the apex bank said.
Despite the decline in foreign exchange reserves, CBK said that the reserves "remain adequate, meeting CBK's statutory requirement to endeavor to maintain at least four months of import cover."
The drop in forex reserves coincided with increased pressure on the shilling, which fell to a one-month low of 129.64 against the dollar this week, down from an average of 129.2, according to the CBK.
The shilling also weakened against the British pound and the euro, trading at 163.8 and 139.7, respectively, this week, the CBK reported.
The central bank typically sells dollars to stabilize the shilling in cases of volatility in the international currency market.
The bank's intervention helped the shilling close at 129.2 on Friday.
In addition to currency market volatility, increased dollar demand from importers, particularly at the end of the month, also contributed to the decline in forex reserves. ■
