The Interbank Rate

According to the Central Bank of Kenya’s weekly report, the interbank rate, which is the cost at which commercial banks borrow from one another, increased to 16.75% during the week ending June 18, 2012 from 16.47% in the previous week. The average number of borrowing and lending deals between the banks decreased to 52 from 57 the week before. During the week the CBK mopped up KES 10.7 billion up from KES 9.95 billion the week before.

Kenya Shilling Performance

Last week, the Kenya Shilling strengthened against major International currencies in the week ending June 14, 2012. It strengthened against the US dollar and the Sterling Pound by 0.84% and 0.19% respectively to trade at an average of KES 85.09 per US dollar and KES 132.06 per Sterling Pound. In the region, the Kenya Shilling strengthened against the Tanzania Shilling, Uganda Shilling and Rwanda Franc. On average, the Kenya Shilling exchanged at Ushs 29.25, Tshs 18.66 and RWF 7.09 during the week ending June 14, 2012 compared with Ushs 29.10, Tshs 18.50 and RWF 7.03.

Government Securities

The Government through the CBK offered for sale KES 2 billion in both 91 day and 182 day Treasury bills during the week ending June 15, 2012. The 91 day paper attracted bids worth KES 0.6 billion, equivalent to 32% subscription rate, while the 182 day paper attracted KES 2.4 billion worth of bids, equivalent to 120.9% subscription rate.

The weighted average interest rates on the 91 day Treasury bills increased to stand at 10.537% while that of the 182 day bill decreased further to 10.737%. (See Investors Prefer Longer Dated Bonds).

NSE Performance

As at the end of the end of the week the NSE 20-share index stood at 3,685.36, this is 15 points shy of the 3,700 level once reached in August 2011. It was 34.09 points higher than the 3,651.27 level it had closed at the week before. The NSE All-share index also increased but by a smaller margin of 0.79 points to 79.41 points.

Market capitalization remained above the one trillion shilling mark. It rose by KES 10.052 billion to reach KES 1.01775 trillion. Equity turnover however declined to KES 1.57339 billion from KES 1.73092 billion the previous week. The number of shares traded also fell, closing at 112.62million shares from 127.33 million the week before.

This suggests that investors are probably holding their stocks waiting for prices to increase further and take profits.