NAIROBI. — The amount of foreign currency in Kenyan banks has risen considerably as institutions diversify their reserves by embracing the Chinese yuan.
Kenyan banks’ foreign currency deposits rose from $5.14 billion in May to $5.74 billion in June, Central Bank of Kenya data showed on Wednesday.
The foreign reserves have been on an upward trend in the second quarter where they crossed the $5 billion mark in May.
In April, the reserves stood at $4.7 billion.
Initially, Kenyan banks kept their foreign reserves mainly in dollars, British pound and euro.
However, increased bilateral ties between Kenya and China has seen a number of the 42 commercial banks in the East African nation adopt the yuan, which analysts cite as part of the reason for the surge in foreign deposits.
Last month, the Kenyan Bankers Association (KBA) asked members to raise their stock of the Chinese currency to cater for the increased China-Kenya trade.
KBA chief executive Habil Olaka said the yuan has become important in settling financial transactions, prompting Kenyan banks to set up China-dedicated desks and increase stock.
Banks with yuan desks include Equity Bank, Standard Chartered Bank, Stanbic Bank and National Bank.
“There is a lot of trade now and the Chinese currency is becoming medium of transacting between entities,” he said.
Other sources of the foreign exchange deposits by banks include Diaspora remittances. — Xinhua.