Kenya Considers Boosting Gold Reserves to Diversify from US Dollar, Says CBK Governor

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Kenya is actively considering the inclusion of gold in its foreign exchange reserves as part of a broader strategy to reduce reliance on the US dollar and other major currencies, according to Central Bank of Kenya (CBK) Governor Kamau Thugge.

In an interview with Bloomberg TV during the International Monetary Fund (IMF) and World Bank Spring Meetings in Washington, Thugge confirmed that a dedicated team is currently evaluating the feasibility of this move. However, no definitive timeline has been established.

Responding to a question about whether the CBK plans to follow the lead of other central banks diversifying their reserves with gold, Thugge said, “It’s something we’ve been considering for some time, and we are now actively exploring it. A team is assessing its practicality, but I wouldn’t want to commit to a specific timeframe.” He emphasised that the push to diversify Kenya’s reserve portfolio—currently heavily weighted toward the US dollar—is a key motivation behind the interest in gold. As of the latest data, Kenya holds just 0.02 tonnes (20 kilograms) of gold in its reserves.

By increasing its gold holdings, the CBK aims to enhance financial stability and protect against currency fluctuations. This initiative also aligns with legislative efforts to formalise and strengthen Kenya’s gold sector. A bill under review in Parliament proposes the establishment of a Gold Processing Corporation to regulate and streamline gold trading. This could boost domestic production, reduce illicit trade, and support the CBK’s long-term reserve goals.

The move comes amid a global surge in gold demand. In 2024, gold prices have risen 29% year-to-date, making it one of the top-performing assets as investors seek safety amid geopolitical tensions and trade-related uncertainties. Central banks worldwide have been increasing their gold reserves to hedge against dollar exposure and potential sanctions. Nations such as China, Russia, and India have been leading this trend, aiming to reduce dependence on the US dollar.

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According to the World Gold Council’s Q4 and Full Year 2024 Gold Demand Trends report, total gold demand—including over-the-counter (OTC) transactions—hit a record 4,974 tonnes, driven by sustained central bank buying and robust investment interest. The total value of demand reached an all-time high of $382 billion.

In 2024 alone, central banks purchased over 1,000 tonnes of gold for the third consecutive year, with Q4 purchases surging to 333 tonnes, bringing the annual total to 1,045 tonnes.