Shilling Slightly Weakens to Close Monday at 100.26 to the Dollar

The shilling continued to weaken albeit marginally closing at an average of 100.26 on Monday according to stats by Genghis Capital.

“We expect this pressure to keep up in today’s trading,” said Genghis

The money market overnight rate rose to 5.2 percent on volumes of 17 billion shillings despite the injection of liquidity by the Central Bank of Kenya (CBK).

5 billion shillings was offered in reverse repos and 5.3 billion shillings received in bids. The CBK accepted 5 billion shillings at 9.6 percent slightly lower than the 9.7 percent accepted in the last reverse repo action.

The two factors are expected to increase caution from investors in the fixed income market this week, with slightly higher bids on medium-term and infrastructure bonds seen yesterday.

Secondary market activity declined to 1.5 billion shillings with trades on the new issue FXD1/2018/5 at 12.25 percent contributing 58 percent.

The market closed with unfilled demand on this paper at 12.25 percent and 20 percent while supply held at 12.15 percent.

“We expect the rate to decline further and settle shy of the 5-year tenor psychological level of 12 percent,” said Genghis.

Foreign investors sustained net selling in the session exiting Safaricom, KCB, Equity, and EABL. Today we still expect interest on these counters and mainly SCOM ahead of the release of its FY17 financials tomorrow.