MACROECONOMICS FACTORS AFFECTING THE LEVELS OF FOREIGN EXCHANGE RESERVES IN KENYA

The general objective of this study was to investigate the factors that affect levels foreign exchange reserves in Kenya. real inspiration based on fact continuous high appetite for external loans finance budget deficit/mega infrastructures country has been concern economists Kenyan economy. To achieve objectives a methodology framework autoregressive distributed-lag (ARDL) undertaken year period from 1995 2019. Descriptive statistic research design used. Secondary data collected World Bank website, CBK website and WDI employed. Data analysis done using E-views 11 software results presented form tables. findings revealed long-run relationship among all variables. Moreover, log BOP, debt, remittance debt servicing long run have significant impact stock while GDP nominal rate are insignificant. Time series properties were tested such as presence unit roots co-integration variables ensure spurious would not result. Before interpreting results, estimated models subjected pre post diagnostic test. Some tests conducted residual normality test, multicollinearity serial correlation regression specification error model stability tests. concluded reserve build-up Kenya is mainly function growth GDP, remittances short-run debt. In addition, coefficients showed remittances, Lag (NEXCR), exhibits negative effects stocks run, with exhibiting positive though insignificant effect stocks. Nominal Exchange sign showing an inverse holdings, although statistically insignificance taken indicate Kenya’s somehow managed by some period. External having affirms position find herself due accumulation too much dominated Debt eats into since repaid currency thus putting constraint run. Keyword: Servicing, Debt, Remittances (from abroad) , Current Account Foreign Reserves CITATION: Keinan, F. G., & Muturi, W. (2023). Macroeconomics affecting Strategic Journal Business Change Management, 10 (2), 260 –276.