Kenya’s dollar reserves strengthen to US$7.22 billion as tourism recovers

Kenya's foreign exchange reserves have began the year stronger, standing at 7.22 billion U.S. dollars, a billion dollars higher than where they stood in October 2015, data from the Central Bank of Kenya (CBK) showed Monday.

central bank kenya
Central Bank of Kenya

The 7.22 billion dollars are 4.6 months of import cover, up from 3.98 months of import cover in October.

central bank kenya
Central Bank of Kenya

The surge in the dollar reserves means the CBK can effectively intervene to save the shilling if it comes under pressure from international currencies.

The local currency is currently exchanging against the dollar at a low of 102, from 96 dollars months ago.

Decline in dollar reserves were partly blamed for the fall of the shilling to 106 dollars against the dollar in September last year as CBK had no enough dollars to release into the local market to save the shilling.

Analysts attribute the surge in the dollar reserves to the revival of tourism sector, which is fast-recovering.

Tourism had taken a beating following increased terror attacks from the Al-Shabaab, with the worst happening on April 2 last year at Garissa University College, where the Somali-based militants killed 148 people, 142 of them students.

Several western nations, including the U.S., Britain and France, have lifted travel advisories issued against Kenya following the terror attack in Garissa.

Hotels in the East African nation in December last year witnessed a surge in the number of international tourists, with a good number of them coming in chartered planes and cruise ships.

More than 3,000 tourists arrived at the Kenyan Coast, the bedrock of the country’s tourism in cruise ships in the last quarter of 2015, after a two-year hiatus.

The latest cruise ship docked in Mombasa with close to 1,000 tourists on Jan 2. Another ship with a similar number of tourists is expected later this month and another in February.

East African nation, however, hopes that the sector would fully recover by 2018, following the injection of 51 million dollars into a marketing plan to sell the country in different parts of the world, including in Asia and in the West.

Tourism is one of Kenya’s top foreign exchange earners, bringing in over 1 billion dollars annually.

“Tourism is playing a key role in bolstering the dollar reserves. The number of tourists who have come to Kenya in the quarter ending December went up significantly,” said Henry Wandera, an economics lecturer in Nairobi.

Other sources of the foreign exchange reserves, according to him, include disbursements from donors and sale of government securities at the debt market. Enditem

Source: Xinhua

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