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Kenya’s central bank governor, Kamau Thugge, reassured markets on Thursday that the nation possesses sufficient foreign exchange reserves to stabilise the shilling against volatility caused by the conflict in the Middle East.
With reserves currently exceeding $13 billion, the governor emphasised that the country is well-prepared to navigate economic shocks, including potential declines in tourism, a slowdown in exports, and reduced diaspora remittances.
The Kenyan shilling experienced moderate pressure in March, depreciating by approximately 0.7% following the onset of military strikes involving the U.S., Israel, and Iran.
However, the currency regained much of its value on Wednesday after the announcement of a two-week ceasefire.
Thugge noted that the central bank had deliberately built up these financial buffers in anticipation of such global instability to ensure domestic economic resilience.
In a move to further protect the economy, the Central Bank of Kenya has paused its rate-cutting cycle, maintaining its key lending rate to monitor the secondary effects of rising global energy prices.
Policymakers want to keep interest rates steady to help fight inflation caused by the regional war. They also want to use their strong reserve position to step in if needed in the foreign exchange market.
