Nairobi, March 5 -- Kenya's foreign exchange reserves have dwindled back to below the $7 billion (Sh1.019 trillion) mark for the first time in five weeks, reversing an upward trajectory and signalling reduced capacity for monetary authorities to support the shilling.

Data from the Central Bank of Kenya (CBK) indicates that forex reserves declined by $259 million (Sh38 billion) to $6.96 billion (Sh1.012 trillion) as of Thursday last week, a 3.6 percent drop from the $7.22 billion (Sh1.05 trillion) a week earlier. This is equivalent to 3.7 months of import cover.

The country's forex reserves had hit the highest level in over five months on February 22, coming on the back of two concessional foreign loans that also saw the shilling rally a...