Kenya in talks with BOE to store gold it seeks to purchase

Kenya plans to buy gold to diversify its reserves and has held talks with the Bank of England on topics including bullion storage, the East African nation’s central bank governor said.

The country is among the latest looking to bulk up holdings of the precious metal that’s more than doubled in price over the past two years, with some investors viewing it as safer than the dollar. Others in the region including Zambia and Ghana are already building reserves, while Rwanda and Uganda plan to follow suit.

“We’ve talked to the Bank of England and other banks to see how we go about it — where it will be stored, those kind of things,” Central Bank of Kenya Governor Kamau Thugge said in an interview in Washington. “I’m hoping that we can do it as soon as is practical because we’re ready to move.”

Kenya’s plans to add gold “is not an intention to diversify away from dollars per se, but basically to diversify our foreign holdings,” he said.

Gold’s record run has benefitted from investors expecting further Federal Reserve interest-rate cuts, while rising debt levels in the developed world have also triggered concerns. The surging prices that have topped $4,200 an ounce prompted some caution from Thugge.

“Those who got in early have made a killing,” he said. “Those who get in late can also be killed. So it’s important that we hold a level where, should there be a reversal in the price of gold, it doesn’t really have a huge impact on our holdings.”

The central bank head declined to say how much of Kenya’s $11 billion foreign reserves it could convert to gold.

Yuan reserves

Kenya’s record reserves now also mean the country is “able to face any debt-service payments that may come our way,” Thugge said. The government is rearranging its liabilities to push out maturities of dollar bonds, albeit at higher interest rates.

Kenya has also swapped dollar-denominated loans from China into yuan, which it says will help lower the interest rate on the debt. The central bank already holds yuan reserves, and “there’s been no conversation of increasing yuan at the expense of dollar holdings,” Thugge said.

The nation’s economic stability has improved since last year, with inflation cooling and the shilling having stabilized in value since August 2024. The government aims to cement those gains with a new financed program with the International Monetary Fund, Thugge said.

Kenya could access a “normal” level of additional financing from the Washington-based lender, having already tapped about 536% of its quota, he said. It could still access about $472 million, according to calculations by Bloomberg.

Yet Thugge cautioned that a new deal must avoid aggressive reforms, taking lessons from a previous program that pushed fiscal consolidation but stoked deadly social unrest in 2024.

“Sometimes it’s better to be ambitious, but not overly ambitious so that an adjustment that you want can be done in two years instead of one,” he said. “If you miss the one year because of social unrest, then possibly you will not be able to achieve it in the second or third year, because nobody wants to go back to where there’s social unrest.”

(By Jennifer Zabasajja and Matthew Hill)