The money markets remained liquid during the week, with the average interbank rate coming in at 3.2 percent, similar to what was recorded the previous week, partly attributable to tax remittances that offset government payments.
The average interbank volumes increased by 142.5 percent to 9.9 billion shillings from 4.1 billion shillings recorded the previous week.
3-month bank placements ended the week at 7.7 percent, while the yield on the 91-day T-bill increased by 2.7 bps to 6.5 percent.
The average yield of the Top 5 Money Market Funds increased marginally by 0.1 percentage points to 9.9 percent, from the 9.8 percent recorded the previous week.
Yield on the Cytonn Money Market Fund increased marginally by 0.1 percentage points to 10.7 percent, from 10.6 percent recorded last week.
Here are the top 10 money market funds in Kenya:
- Cytonn Money Market Fund
- Nabo Africa Money Market Fund
- Zimele Money Market Fund
- Madison Money Market Fund
- CIC Money Market Fund
- Sanlam Money Market Fund
- Co-op Money Market Fund
- GenCap Hela Imara Money Market Fund
- Dry Associates Money Market Fund
- Orient Money Market Fund
At the same time, rates in the fixed income market have remained relatively stable due to the high liquidity in the money markets, coupled with the discipline by the government as they reject expensive bids.
The government is 9.1 percent ahead of its prorated borrowing target of 76.0 billion shillings having borrowed 82.9 billion shillings in FY’2021/2022.
“We expect a gradual economic recovery going into FY’2021/2022 as evidenced by KRA collecting 1.7 trillion shillings in FY’2020/2021, a 3.9 percent increase from 1.6 trillion shillings collected in the prior fiscal year,” said Cytonn Investments.
However, despite the projected high budget deficit of 7.5 percent and the lower credit rating from S&P Global to ‘B’ from ‘B+’, we believe that the monetary support from the IMF and World Bank will mean that the interest rate environment may stabilize since the government will not be desperate for cash.
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