Kenya's foreign currency reserves hit 1.6 billion US dollars in 2005 from about 1.3 billion dollars it reported in 2004, boosted by a robust economic growth rate and increased cash-inflows from tourism, the Central Bank of Kenya ( CBK) said Friday.

CBK Governor Andrew Mullei said the bank achieved its targets of beefing up the foreign reserves while maintaining a low inflationary trend in the financial markets to help safeguard the investments by Kenyans and boost investor confidence.

The bank, which reported a 4-billion-shilling (about 54 million dollars) loss due to foreign currency valuations caused by the strengthening of the Kenyan Shilling against the major currencies, said it would tighten the monetary policy to expand local money supply.

Kenyan bankers expect the local economy would continue to enjoy the benefits of the global economic growth and reap from the expansion of regional markets.

"The targets set for reserve money supply and economic growth was broadly achieved, despite several challenges posed by developments in the financial markets. Given this achievement, it is satisfying to see the robust performance of the economy," Mullei told a news conference in Nairobi.

The bank governor, who was prompted by media reports that the bank made a loss of 4 billion Shillings, said the losses were incurred due to currency valuations, which saw it lose as it was forced to clean up its balance sheets as required by international accounting requirements.

"The reserves went up and since everybody holding reserves are required to convert the assets into local currency, translating our foreign accounts to Kenyan shillings led to loss," he said citing international accounting standards.

The foreign reserves, which every central bank in any country must keep to facilitate international trade, mainly assisting its citizens to import and export goods and services, is a key indicator of a country's wealth and economic growth.

Source: Xinhua