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Exchange rates

exchange-rates-02-12-2016

The Kenya Shilling held steady against the US Dollar despite Dollar demand from importers. The Dollar –Shilling exchange rate was capped below 102.00 levels. Traders remained wary of CBK intervention if the Shilling depreciated past 102.00 levels. Apart from CBK intervention support, the Shilling may be under pressure in the coming week before companies close for the holiday season.

US Dollar depreciated against most of its major peers during the week. The decline was crowned on Friday after release of mixed US employment data. Though nonfarm payrolls printed out at 178k better than market expectations of 175k and unemployment rate declined from 4.90% to 4.60%, wages fell with hourly average earnings coming in at -0.1% versus market expectations of 0.2%. Investors ignored the positive data dumping Dollars since a drop in average earnings would have a significant impact on inflation.

The Dollar may recoup some of its losses in the coming week if the Federal Reserve (FED) remains true to their word and hike rates this December as expected. In the mean time, European Central Bank (ECB) and Reserve Bank of Australia (RBA) will be making their interest rate decisions in the coming week. ECB may leave rates unchanged but increase their quantitative easing program to counter deflation.

usdkes-graph-02-12-2016

Key benchmark interest rates

bench-mark-rates-02-12-2016

Interbank lending rate increased by 0.8397% from 5.9206% to 6.7603%. Volume traded averaged 19.456 billion during the week.

91 day T-bill rate rose by 0.036% from 8.326% previous week to 8.362%. CBK offered a total of Kshs 4 billion. Bids amounted to Kshs 5.664 billion of which Kshs 5.624 billion were accepted.

182 day T-bill rate rose by 0.091% from 10.371% previous week to 10.462%. CBK offered a total of Kshs 6 billion. Bids amounted to Kshs 6.801 billion of which Kshs 6.741 billion were accepted.

364 day T-bill rate rose by 0.075% from 10.825% previous week to 10.90%. CBK offered a total of Kshs 6 billion. Bids amounted to Kshs 4.417 billion of which Kshs 4.372 billion were accepted.

CBK was in the market to inject 30 billion shillings during the week via reverse repos. Shilling demand was high during the week as investors prepared to pay for the bond FXD3/2016/002 on offer.

Volume on t-bill bids decreased in all auction participations during the week. T-bill rates may hold steady or rise in the coming week.

The graphs below depict visual movement of the interbank rates.

interbank-rates-02-12-2016

The graphs below depict visual movement of the T-bill rates.

tbill-rates-02-12-2016

Capital Markets

Equities

equities-02-12-2016

Bonds

The Kenyan government through the regulator, Central Bank of Kenya is offering eligible investors an opportunity to invest in a new bond issue – FXD3/2016/2. The bond will be for duration of two years with a market determined coupon rate. Amount offered is 30 billion shillings with a minimum bid of 50,000 Kenya shillings. The investor will receive four semiannual coupons during the tenure and principle on maturity of the bond. Non competitive bid is capped at 20 million shillings per investor.

Interested investors should submit duly completed application forms by 2.00 pm, 13th December 2016 to any branch of the Central Bank and obtain details of amount payable on 15th December 2016 from the Central Bank.

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Posted by Timothy II Aperit

True believer in numbers. Statistics never lie. Bsc Financial Engineering MBA Finance ACCA