Regional central banks have noted the need to increase their local gold purchases as part of efforts to diversify their reserves amid ongoing conflicts in the Middle East.
During a 29th Ordinary Meeting by the East African Community (EAC) central banks under the Monetary Affairs Committee, the governors noted the need diversify its reserves currently dominated by foreign exchange, majorly the US dollar.
This comes amid heightened risks due to the rising energy prices and shipping costs with the resumption of the United States and Israel war with Iran leading to disruptions in the Strait of Hormuz.
“The committee therefore noted the need for Partner States Central Banks to build resilience, diversify the sources of international reserves through domestic gold purchase and attracting remittances, and coordinate regional policy responses,” said MAC after the meeting in Kampala, Uganda.
Kenya is currently the leading the region with gold reserves of 0.02 tonnes as at December last year and which has been the country’s average holding over the last two decades according to data by Trading Economics.
The country’s foreign exchange reserves according to data by the Central Bank of Kenya (CBK) declined to $13.85 billion equivalent to 5.6 months of import cover but still above statutory requirement.
The committee comprising central bank governors from Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan and Somalia expects EAC region to grow 5.2pc this year despite the global risks and higher food prices.
“Inflation is expected to remain moderate, assuming a gradual de-escalation of the conflict in the Middle East. Regional currencies are also expected to remain broadly stable supported by diversified foreign exchange inflows and domestic exchange market reforms.”
In the 2025/26 fiscal year, the committee noted that the average headline inflation moderated to 6.7pc from 9.pc the previous year.
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