The Central Bank of Kenya (CBK) has increased its gold holdings by 40.8% during the financial year ending in June 2025. This marks a significant move by the bank to strengthen and diversify Kenya’s foreign exchange reserves. According to CBK’s latest annual report, the value of CBK’s gold holdings rose by 40.8% to KES 238.0 mn in 2025, from KES 169.0 mn in 2024, showing that the country is starting to view gold as an important part of its financial security.
The main reason behind this increase is to diversify Kenya’s reserves. Traditionally, CBK’s reserves have been held mostly in foreign currencies such as the US dollar, the Euro, and the British pound. While these are stable currencies, their values can still fluctuate due to global economic changes. By including gold, CBK hopes to reduce its dependence on foreign currencies and protect Kenya’s reserves from sudden currency shocks or inflation.
Gold is often seen as a “safe-haven” asset. This means that during times of uncertainty or crisis, gold tends to keep its value better than most other assets. In recent years, many central banks around the world have been buying more gold because of rising global risks, including inflation, geopolitical tensions, and the weakening of major currencies. Kenya’s move aligns with this global trend, as countries try to protect their economies from unpredictable market movements.
Although the 40.8% increase sounds large, it is important to note that Kenya’s gold holdings are still a very small portion of its total foreign reserves. According to CBK’s report, its total reserves are valued at about KES 1.4 tn (around USD 11.0 bn), meaning gold makes up less than one percent of the total. Still, the increase is a meaningful first step and shows a clear intention to gradually expand Kenya’s gold position over time.
The rise in the value of gold holdings could also be linked to higher global gold prices. In 2025, gold prices reached record highs as investors around the world sought safe investments. Therefore, part of the increase in Kenya’s gold reserves might be due not only to new purchases but also to the higher value of the gold already held.
This decision carries several benefits. It boosts investor confidence by showing that Kenya is managing its reserves more prudently. It also improves the resilience of the country’s financial system, as gold can help cushion the economy against currency volatility. Furthermore, the move could encourage the development of Kenya’s own gold mining and trading sectors, creating opportunities for the local economy.
However, there are also challenges. Gold does not earn interest like other financial assets, and it requires secure storage and insurance. The CBK must therefore balance its gold purchases carefully to avoid holding too much of a non-income earning asset.
