The Kenyan shilling strengthened against the US dollar amid low demand for the greenback and tight shilling liquidity in the local market. The shilling closed at 101.00/20 on Friday afternoon. Tight liquidity and prospects of Central Bank intervention would keep the shilling supported in the coming week.
British pound declined against US dollar further as markets continue to digest the BREXIT vote outcome effects in global markets. Volatility was high during the week and Bank of England intervened to calm markets. Political uncertainty would keep the currency volatile for the coming weeks as battle for supremacy for the Prime Minister Seat rages after seated PM David Cameron resigned following the BREXIT vote.
US dollar traded fairly stable against Euro and other G10 currencies as the Pound took all the lime light in the financial markets.
Reserve Bank of Australia(RBA) interest rate decision, European Central Bank (ECB) non monetary policy meeting, Federal Open Market Committee (FOMC) minutes, Bank of Japan (BOJ) Governor Kuroda speech and ECB monetary policy meeting accounts are some of the major economic release that are due next week.
Key benchmark interest rates
Month on month inflation increased from 5.00% in May to 5.80% in June. The increase can be attributed to increase in prices of food items and increase in global oil prices. Inflation may increase next month as world oil prices continue to revert upwards.
Interbank lending rate rose from 7.0761% to 8.7297%. Volume traded increased from 11.150 billion to 16.305 billion. Tight liquidity in the local market saw increased activity in the interbank market. The interbank rate hit a high of 9.1379% on Thursday with volume traded hitting its highest level for the month at 21.715 billion.
91 day T-bill eased by 0.014% from 7.059% previous week rate to 7.045%. CBK offered a total of Kshs 4 billion. Bids amounted to Kshs 3.385 billion of which all was accepted. Volume on bids received decreased week on week basis.
182 day T-bill rose by 0.154% from 9.239% previous week rate to 9.393%. CBK offered a total of Kshs 6 billion. Bids amounted to Kshs 1.125 billion of which all was accepted. Volume on bids received decreased week on week basis.
364 day T-bill declined by 0.061% from 10.737% previous week rate to 10.676%. CBK offered a total of Kshs 6 billion. Bids amounted to Kshs 1.316 billion of which all was accepted. Volume on bids received decreased week on week basis.
CBK offered to mop up a total of 35 billion shillings in the local market this week via repos. The regulator’s activity in the market last week indicates that demand for shillings would increase next week. Treasury bill rates may rise as volume traded decreases from tight liquidity.
The graphs below depict visual movement of the interbank and T-bill rates.
WPP ScanGroup (SCAN) featured again among the worst performers of the week. The stock was absent in last week’s top losers after featuring as the second worst performing stock two weeks ago. The share price declined from 21.00 shillings to trade at 18.40 shillings.
Flame Tree Group Holdings (FTGH) topped as the best performer of the week. The stock price rose by 9.28% to trade at 5.30 shillings per share.