Headlines

Inflation Up, Fuel Prices Up, More Taxes Loading, Tough Times For Kenyans

BY Standard Investment Bank · November 6, 2023 10:11 am

During the week, liquidity in the money market moderated following a series of tightening, as the average interbank rate slowed to 12.32%, from 12.59% in the previous week.

We suspect the end-of-month government payments replenished the liquidity position of some institutions. However, the average traded volumes, dropped slightly to KES 14.34bn, from KES 14.50bn, the previous week.

The table below summarizes the market liquidity indicators:

Inflation

The Central Bank persisted in its commitment to bolster liquidity for entities facing constraints by injecting KES 100.92bn through 7-day reverse repo purchases – following the maturity of KES 115.4bn purchases the previous week.

See a summary of the offering below;

During the week, Treasury bills were oversubscribed in tandem with the improved liquidity in the money market. The Central Bank received a total of KES 24.68bn in bids, resulting in an overall subscription rate of 102.82%, up from 75.63% the previous week.

The proportion of bids geared towards the 91-day paper remained the highest at 91.10% with the subscription rate coming in at 562.0%, from 265.97%.

The subscription for the 182-day and 361-day paper remained low at 12.82% and 9.14%, down from 56.68% and 18.43%, respectively, in the previous week.

See the table below:

At the same time, the most recent Purchasing Managers’ Index (PMI) data shows that Kenya’s private sector business conditions remained in the contraction zone in October. The headline figure declined to 46.2, down from September’s 47.8, representing the second most sluggish growth observed in over a year.

The deceleration is primarily attributable to the substantial escalation in fuel prices coupled with a weakening currency, which has exerted significant upward pressure on input costs (especially imported ones).