The Interbank Rate

According to the Central Bank of Kenya’s weekly report the interbank rate, the cost at which commercial banks borrow from one another, decreased to 15.96% during the week ending May 18, 2012 from 16.35% in the previous week. The average number of borrowing and lending deals between the banks decreased to 52 from 64 the week before. This is attributed to the aggressive mopping up of excess liquidity as carried out by the Central Bank of Kenya (CBK) in response tot he weakening shilling and in pursuit of lowering inflation further. During the week the CBK mopped up KES 7.30 billion down from KES 10.86 billion the week before.

Kenya Shilling Performance

Once again, the Kenya Shilling depicted mixed performance against major International currencies in the week ending May 18, 2012. It depreciated against the US dollar and the Sterling Pound by 0.78% and 0.02% respectively to trade at an average of KES 83.95 per US dollar and KES 134.60 per Sterling Pound. In the region, the Kenya Shilling depreciated against the Tanzania Shilling, Uganda Shilling and Rwanda Franc and appreciated against the Burundi Franc. On average, the Kenya Shilling exchanged at Ushs 29.52, Tshs 18.80, RWF 7.20 and BIF 16.54 during the week ending May 18, 2012 compared with Ushs 29.70, Tshs 18.98, RWF 7.24 and BIF 16.43 in the previous week.

Government Securities

The Government through the CBK offered for sale KES 2.0 billion in 91 day and KES 2.0 billion in 182 day Treasury bills during the week ending May 18, 2012. The 91 day paper attracted bids worth KES 3.0 billion, equivalent to 150% subscription rate, while the 182 day paper attracted KES 3.3 billion worth of bids, equivalent to 167.1% subscription rate. Collectively, the Government accepted bids amounting to KES 4.7 billion during the week.

The weighted average interest rates on the 91 day and 182 day Treasury bills decreased further with the 91 day bill recording a yield of 10.075% and the 182 one recording a yield of 12.078%. (See Yields on Government Securities fall)

NSE Performance

As at the end of the end of the week the NSE 20-share index stood at 3,677.81, this is 88.38 points higher than the 3,589.43 level it had closed at the week before. The NSE All-share index also increased but by a marginal 1.55 points to 79.91 points.

Market capitalization rose by KES 19.66 billion (2%) to reach KES 1.02296 trillion. Equity turnover however declined to KES 1.819 billion from KES 2.645 billion the previous week. The number of shares traded also fell, closing at 98.21 million shares from 120.03 million the week before.