Kenya FX reserves edge lower

NAIROBI: Kenya's central bank said in its latest weekly bulletin that official usable foreign exchange reserves declined marginally to $3.957 million as of June 24 from $3.976 billion a week earlier.

The central bank said its foreign exchange reserves were equivalent to 3.72 months of import cover, down from 3.79 months a week earlier. The bank is supposed to hold official reserves equivalent to four months of import cover.

The central bank also said that due to tight liquidity in the money market, lending through its overnight window jumped.

It said commercial banks borrowed 127.9 billion shillings ($1.4 billion) from the central bank overnight window in the week ending June 22, up from 56.4 billion in the previous week.

Some analysts and Kenyan officials have said commercial banks may be borrowing at the overnight window to fund holdings of high-yielding short-dated government debt, or to take positions against the shilling in the market.

COPYRIGHT REUTERS, 2011