A Detailed Look At The Recent Monetary And Financial Developments In Kenya

Exchange Rates

The Kenya Shilling remained relatively stable against major international and regional currencies during the week ending June 22. It exchanged at KSh 140.31 per US dollar on June 22, compared to KSh 139.71 per US dollar on June 15.

Foreign Exchange Reserves

The usable foreign exchange reserves remained adequate at USD 7,375 million (4.06 months of import cover) as of June 22. This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover.

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Money Market

Liquidity in the money market remained adequate during the week ending June 22, supported by government payments.

Commercial banks’ excess reserves stood at KSh 92.0 billion in relation to the 4.25 percent cash reserves requirement (CRR).

Open market operations remained active. The average interbank rate was at 9.85 percent on June 22 compared to 9.42 percent on June 15.

During the week, the average number of interbank deals declined to 22 from 34 in the previous week, while the average value traded declined to KSh 9.4 billion from KSh 18.3 billion in the previous week.

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Government Securities Market

The Treasury bills auction of June 22, received bids totaling KSh 15.3 billion against an advertised amount of KSh 24.0 billion, representing a performance of 63.9 percent. Interest rates remained stable, with 91-day, 182- day and 364-day rates increasing marginally.

Equity Market

At the Nairobi Securities Exchange, the NASI, NSE 25, and NSE 20 share price indices increased by 6.5 percent, 2.5 percent, and 0.5 percent, respectively, during the week ending June 22. Market capitalization and total shares traded increased by 6.5 percent and 17.1 percent, respectively, while equity turnover declined by 23.5 percent.

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Bond Market

Bond turnover in the domestic secondary market increased by 353.6 percent during the week ending June 22. In the international market, yields on Kenya’s Eurobonds declined by an average of 5.9 basis points, with, the 2024 maturity declining by 47.2 basis points. The yields on the 10-Year Eurobonds for Angola and Ghana increased.

Global Trends

Inflation concerns in advanced economies remain. Inflation in the UK was unchanged at 8.7 percent in May. While the Fed retained the policy rate, the Bank of England raised its rate by 50 basis points to 5.0 percent in June 2023.

The US dollar index strengthened by 0.3 percent against a basket of major currencies during the week ending June 22. International oil prices increased during the week ending June 22, due to increased Chinese demand and OPEC+ supply cuts. Murban oil price increased to USD 77.80 per barrel on June 22 from USD 74.50 per barrel on June 15.

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Content from the CBK Weekly Bulletin