Stellar Performance by Kenya Shilling against Basket of Currencies

The Kenyan Shilling capitalised on a highly anticipated week for its international peers, which were expected to release an abundance of economic data and Central Bank speeches; registering gains against all but one of the currencies in its basket.

The local unit recorded an astounding 0.60% gain against the US Dollar, as four consecutive rallies resulted in the pair closing at 100.57. The US Fed decision to hold rates steady continued to be weigh heavy on the greenback as investors remained sceptical of their December decision to hike the rate.  This was further exacerbated by a lower than expected nonfarm payroll- by USD42, 000; which showed little sign of the economy recovering.

Across the pond, the shilling garnered points against the Sterling Pound by a significant 1.08%, as service and manufacturing PMIs for the latter dampened investor’s sentiments on the economy; with the service sector maintaining fundamental status. Closer to home, the shilling recorded its largest gains for the week against the South African Rand, at 12.49% to close trading at 6.72.

The rand continued to slip against its own basket of currencies, initially as a result of muted appetite for riskier assets ahead of the US Federal Reserve policy meeting. However, the lion’s share came as Pretoria showed a lack of commitment to reigning in its budget deficit, resulting in rating agencies warning of a possible downgrade; Standard & Poor’s and Fitch rate South Africa a notch above sub-investment grade, while Moody’s has it two notches above.

Commodities

Oil Drop Could be First in the Last 11 Weeks

Oil Drop Could Be the First in the last 11 Weeks: As the week drew to a close oil traded down on the day, with WTI heading for a weekly loss of 4.2% and Brent facing a 7% slump for the last five days. This slump could be the first after an extended period, with black gold having registered advances in 11 of the last 12 weeks. Shedding positive light for the lucrative market, OPEC officials gathered this week to formulate a long-term strategy; with most jaded delegates and governors expecting clash between the powerful members. Riyadh’s maintenance that collective action by all producers is the best solution- reflecting the group’s main strategy of managing oil prices by regulating supply-continued to receive collective scrutiny on Monday. With sources stating that there could be a major shift in thinking, with Saudi Arabia being of the assumption that targeting prices is pointless; as the weak global market reflects structural changes rather than any temporary trend.

Article by Genghis Research.