The Kenyan Shilling remained largely unchanged around 101.80/102.00 levels. The Shilling has been under pressure from sustained corporate Dollar demand. Central Bank of Kenya sold some Dollars in the market during the week but it was not sufficient to prop up the Shilling strength. The Shilling may be under more pressure in the coming week as end month demand for Dollars increases amid sustained Dollar strength in the global markets.
Positive sentiments towards the US dollar prevailed in global markets hence the Greenback appreciated against its major peers. Federal Reserve (FED) Chair Janet Yellen speaking before Congress on Thursday increased market bets on a FED December rate hike to almost 100%. The Dollar strength may continue as election jitters fade and rate hike bets increase.
British Pound declined against US Dollar despite having upbeat data economic releases during the week. Unemployment rate edged down from 4.90% to 4.80%, retail sales increased from 0.1% to 1.9% month on month while inflation slightly edged down. Sustained US Dollar strength seemed to have outweighed the upbeat Pound news.
ECB President Draghi’s speech, US durable goods and FOMC minutes release headline economic news in the coming week.
Key benchmark interest rates
Interbank lending rate decreased by 0.676% from 5.4746% to 4.7985%. Volume traded averaged 14.02 billion during the week.
91 day T-bill rate declined by 0.030% from 8.230% previous week to 8.200%. CBK offered a total of Kshs 4 billion. Bids amounted to Kshs 5.842 billion of which Kshs 2.021 billion were accepted.
182 day T-bill rate rose by 0.016% from 10.302% previous week to 10.318%. CBK offered a total of Kshs 6 billion. Bids amounted to Kshs 10.949 billion of which Kshs 6.631 billion were accepted.
364 day T-bill rate rose by 0.100% from 10.717% previous week to 10.817%. CBK offered a total of Kshs 6 billion. Bids amounted to Kshs 9.138 billion of which Kshs 7.230 billion were accepted.
CBK was in the market to mop up 8 billion shillings and inject 10 billion shillings during the week via repos and reverse repos respectively. The regulator managed to inject 18.295 billion shillings while mopping up 8 billion shillings hence injecting a net of 10 billion shillings in the market.
Volume on t-bill bids increased in the 91 and 182 days auction participation but decreased in the 364 days auction during the week.
The graphs below depict visual movement of the interbank rates.
The graphs below depict visual movement of the T-bill rates.