Inter-bank Rate Declines To 2.6 Percent As Liquidity Eases

Last week, liquidity eased in the money market with the average interbank rate declining to 2.6 percent from 3.1 percent recorded the previous week supported by government payments.

The week also saw the Inter-bank rate record a 10 month low of 2.6 percent as of 9^th June 2020. With the lower interbank rate, the average interbank volumes declined by 63.6 percent to 3.4 billion shillings from 9.4 billion shillings recorded the previous week.

As per the Central Bank of Kenya’s weekly bulletin, commercial banks’ excess reserves came in at 32.8 billion shillings in relation to the 4.25 percent cash CRR.

The favorable liquidity in recent weeks has also partly been attributable to the reduction of the Cash Reserve Ratio (CRR) to 4.25 percent, from 5.25 percent previously, by the Monetary Policy Committee (MPC) during its March 2020 sitting.

Kenya Eurobonds:

During the week, Kenyan Eurobonds recoded mixed performance with the yield on shorter-dated bond reducing while the longer recent bonds saw an increase in the yields.

Since the jump we saw in March, the investor sentiments have been improving following.  According to Reuters, the yield on the 10-year Eurobond issued in June 2014 declined by 0.3 percentage points to 7.1 percent, from 7.4 percent recorded the previous week.

The yields on the 10-year and 30-year Eurobonds issued in 2018 on the other hand increased by 0.1% points and 0.2 percentage points to 8.0 percent and 8.8 percent, respectively, from 7.9 percent and 8.6 percent recorded the previous week, respectively.

The yields on the 7-year and 12-year Eurobonds issued in 2019 also increased by 0.3 percent points and 0.1 percentage points, to 7.9 percent and 8.5 percent respectively, from 7.6 percent and 8.4 percent recorded the previous week, respectively.

READ: Liquidity For February At 4.4% On CBK’s Mopping Up Activities