NAIROBI, Kenya – Kenya’s foreign exchange reserves fell by $221 million in the week ending August 27, 2026, but the Kenyan Shilling remained largely stable against the US dollar and other major international and regional currencies.
The latest figures from the Central Bank of Kenya (CBK) show that the country’s reserves declined from $15.155 billion on August 20 to $14.934 billion on August 27.
Despite the reduction, the reserves remained above the minimum level required to provide a cushion against external shocks, standing at 6.2 months of import cover.
CBK’s statutory requirement is to endeavour to maintain at least four months of import cover.
Kenyan Shilling remains stable against dollar
The Kenyan Shilling traded at Sh129.47 against the US dollar on August 27, compared with Sh129.49 on August 20, representing only a marginal movement over the week.
CBK said the currency remained stable against major international and regional currencies during the period.
The shilling traded at Sh175.83 against the British Pound and Sh150.75 against the Euro.
It exchanged at Sh81.21 per 100 Japanese Yen, while the Uganda Shilling traded at Sh29.00 against the Kenyan currency.
Against other regional currencies, the Kenyan Shilling traded at Sh20.44 against the Tanzanian Shilling, Sh11.35 against the Rwandan Franc and Sh8.09 against the South African Rand, according to CBK’s exchange rates published on August 28.
“The Kenya Shilling remained stable against major international and regional currencies during the week ending August 27, 2026. It exchanged at Sh129.47 per U.S. dollar on August 27, compared to Sh129.49 per U.S. dollar on August 20,” CBK said.
Why shilling stability matters
A stable Kenyan Shilling can help reduce pressure on the cost of imported goods and services, particularly fuel, food, machinery and other products priced in foreign currencies.
Currency stability can also reduce the local-currency cost of servicing external debt because the government and other borrowers require fewer shillings to purchase the foreign currencies needed for repayment.
For households, a relatively stable exchange rate can help contain inflationary pressure associated with imported products.
Businesses also benefit from greater predictability when planning imports, making foreign-currency payments and managing other international transactions.
The exchange rate is therefore closely watched by investors, businesses and policymakers as an indicator of conditions in the foreign exchange market.
Factors supporting the shilling
The stability of the currency has been partly attributed to a relatively strong current account position and increased foreign direct investment.
Purchases of local-currency government bonds by overseas investors have also supported dollar liquidity in the domestic market.
CBK Governor Kamau Thugge has previously pointed to these factors as supporting foreign-currency availability and exchange-rate stability.
However, the unusually stable movement of the shilling has also attracted scrutiny.
Parliament raises concerns over exchange-rate stability
The Parliamentary Budget Committee raised concerns over what it described as unusual exchange-rate stability compared with the volatility normally seen in emerging markets.
In its report on the 2026/2027 Budget, the committee said a lack of natural volatility could potentially conceal foreign-exchange imbalances, particularly as the shilling had weakened against some other major currencies.
The concerns highlight the challenge facing policymakers in maintaining an orderly foreign-exchange market while ensuring that currency movements continue to reflect underlying economic conditions.
Forex reserves remain above minimum threshold
Foreign exchange reserves provide Kenya with an important buffer for meeting external payment obligations and responding to periods of pressure in the currency market.
Although reserves declined by $221 million during the week, the $14.934 billion position remained equivalent to 6.2 months of import cover.
CBK said this remained above its statutory threshold.
“The foreign exchange reserves remained adequate at USD 14,934 million (6.2 months of import cover) as of August 27. This meets CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover,” the bank said.
The reserve position is closely monitored because it indicates the country’s capacity to meet external obligations and withstand potential foreign-exchange shocks.
Money market remains liquid
CBK also reported that Kenya’s money market remained liquid during the week.
Commercial banks’ excess reserves averaged Sh25.5 billion above the 3.25 per cent Cash Reserve Ratio requirement.
The Kenya Shilling Overnight Interbank Average (KESONIA) remained stable at 8.75 per cent.
Interbank market activity increased during the week, with the average number of transactions rising to 26 from 23 in the previous week.
The average value traded also increased to Sh19.1 billion from Sh17.6 billion.
Oil prices fall as gold rises
Global commodity markets recorded mixed movements during the week.
Murban crude oil prices declined to $81.78 per barrel on August 27, down from $84.76 on August 20.
CBK attributed the decline to increased oil flows through the Strait of Hormuz and expectations of improved supply conditions.
Gold prices moved in the opposite direction.
Spot gold rose to $4,601 per ounce from $4,517.87 the previous week, supported by safe-haven demand and expectations of lower interest rates.
Oil prices remain particularly important for Kenya because the country relies heavily on imported petroleum products. Changes in international crude prices can therefore influence domestic fuel costs and, indirectly, transportation and the prices of other goods and services.
