According to the weekly bulletin release by the Central Bank of Kenya (CBK) on Friday 25th, the interbank rate (cost at which banks borrow from one another) increased to 18.46% from 15.96% the week before. This increase can be attributed to the tightening of excess liquidity by the CBK the previous week. The average volumes of money transacted between the commercial banks stood at KES 11.27 billion, this is KES 3.97 billion higher than the KES 7.30 billion the week before.
Kenya Shilling Performance
The Kenya Shilling depicted mixed performance against the major international currencies. Against the Sterling Pound the shilling appreciated 0.61% to average trading at KES 133.79 per Sterling Pound as compared to KES 134.60 the week before.
Against the US Dollar the Kenya Shilling depreciated 1.1% to average trading at KES 84.88. This performance can be attributed to:
- Increased demand for dollars by corporate customers to finance imports especially from the energy sector.
- Increased demand for dollars to finance repatriation of end year dividends by companies with offshore, foreign shareholders.
- Decline on the Treasury bill yields encouraging foreign investors to seek alternative investment s decreasing the flow of US Dollars to the economy.
- The Euro zone crisis surrounding the possibility of Greece leaving the European Union has caused investors to migrate from Euro backed portfolios to US Dollar backed portfolios. This has increased the demand for dollars the world over.
NSE Performance
The performance of the NSE went down, with both the NSE 20-share and the NSE All-share indices dropping. The NSE 20-share index closed 9.60 points lower than the previous week. The NSE All-share index closed 1.12 points lower than the week before.
Equity turnover dropped by 18.6% and the total shares traded fell by 9.3%. The Telecommunications and Technology sector of the bourse had 32.9 million shares traded, contributing 37% of the total shares transacted. Safaricom traded 32.79 million shares, contributing the bulk of the shares traded in this segment. The Banking segment had 28.5 million shares traded with Equity Bank and Housing Finance recording 10.79 million and 10.10 million shares traded respectively.
In the coming week the CBK will auction 91 day and 182 day Treasury bills worth KES 2 billion each.