Kenya is considering the adoption of the Chinese yuan as a reserve currency, its central bank governor said on Tuesday.
Patrick Njoroge, the Governor of the Central Bank of Kenya (CBK), told journalists in Nairobi that a number of African countries are also contemplating including the renminbi as part of their foreign exchange reserves.
“It is inevitable that Kenya will include the Chinese yuan as a reserve currency. The only question is when and the timing will be determined by a number of short term factors,” Njoroge said during the Guangzhou-Foshan Nairobi Business forum in July.
In 2016, the International Monetary Fund included the renminbi to its Special Drawing Right (SDR) basket alongside the U.S. dollar, euro, yen and the British pound. Currently, most of Kenya’s foreign exchange reserves are in dollars.
Njoroge said that China’s growing role in the global economy has made the Chinese yuan one of the currencies of foreign trade.
He noted that bilateral trade and investment ties between Kenya and China have grown exponentially over the past decade.
“This has increased the demand for the Chinese yuan by both Kenya and Chinese traders operating in Kenya,” he said.
The CBO governor added that the addition of the renminbi as a reserve currency will help reduce cost of transaction in Sino-Kenyan trade.
Njoroge noted that the adoption of the Chinese yuan as a currency reserve will be a positive move for the Kenyan economy given the flourishing Sino-Kenyan ties.