Kenya's central bank: Shilling exchange rate to stabilise

The Central Bank of Kenya (CBK) said the recent volatility of the shilling exchange rate is expected to normalize as the impact of seasonal actors dissipate, according to a statement released by the bank on Monday. The local currency has come under pressure following a series of terrorist attacks in the country and slipped to an eight-month low last week. However, the CBK said the volatility of the shillings has been observed around this period in the previous years. "The current level of foreign exchange reserves of 6.24 billion U.S. dollars, equivalent to 4.4 months of import cover, are sufficient to provide adequate cushion against temporary shocks," said the statement. The CBK also said the proceeds from the debut Eurobond will significantly raise the level of foreign reserves with the exchange rate expected to come under pressure to appreciate in the coming months. The East African nation plans to float the Eurobond next month. It has already been factored into the 2014/2015 budget. The bond is also expected to have a positive impact on Kenya's inflation rate. "In the meantime the Bank continues to monitor developments in the market and stands ready to provide support to minimize the volatility of the exchange rate," CBK said.