NAIROBI, Aug. 14 (Xinhua) -- Kenya's foreign exchange reserves have dropped to a five-month low, diminishing the country's ability to sustain imports in the coming months.
The U.S. dollar reserves fell to 7.4 billion dollars, an equivalent of 4.9 months of import cover, last week, down from 7.5 billion dollars or 5 months of import cover, Central Bank's latest data showed on Monday.
The reserves have been on a consistent downward trend in the past months from a peak of 8.3 billion dollars in April as the Central Bank battled to prop up the shilling which was under pressure, especially last month as the country geared for elections.
The dollar reserves fell below the 8 billion dollars mark at the end of June and decelerated in the following weeks to reach the current level.
The apex bank used the forex reserves mainly for two functions, the first being to import goods like oil and second being to cushion the shilling by buying and selling dollars in the market in a bid to balance demand and supply.
Analysts noted that there has been a high demand of dollars in the past weeks, putting pressure on the shilling, as companies paid dividends, the country repaid foreign debt and importers sought to buy goods in bulk ahead of elections.
However, following the peaceful conclusions of elections, the foreign exchange reserves are expected to surge due to increased inflows from diaspora remittances, investors buying government securities and from agricultural sector.
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