MaurineTheuri
Member
The shilling held steady against the US dollar to exchange at Sh107.9 yesterday and give hope to importers to make improved profit margins.
Churchill Ogutu, head of research at Genghis Capital Ltd said the shilling will hold steady against the dollar until June, aided by inflows, and improved foreign exchange reserves.
“We expect dollar flows with the disbursement of World Bank’s third DPO of $1 billion (Sh108 billion), the International Monetary Fund’s second disbursement of $404 million (Sh43.6 billion), and Eurobond issuance of $1 billion (Sh108 billion),” he said.
Ogutu said this is expected to increase the forex reserves and shore up the shilling.
Central Bank of Kenya (CBK)’s weekly Bulletin indicates that week-on-week reserves increased by $231 million (Sh24.9 billion) to $7,656 million (Sh827.6 billion) from $7,425 million (Sh802.7 billion) recorded the previous week.
Foreign exchange
“The usable foreign exchange reserves remained adequate at $ 7,656 million (4.71 months of import cover) as at April 15.
This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover,” the bulletin said.
The banking sector regulator said the money market was relatively tight during the week ending April 15, mainly due to payments for government infrastructure bonds and tax remittances.
Commercial banks’ excess reserves had a shortfall of Sh6.2 billion in relation to the 4.25 per cent cash reserves requirement (CRR).
Average interbank rate was 4.96 per cent on April 15, compared to 4.27 per cent on April 8, according to CBK.
During the week, the average number of interbank deals per day increased to 27 from 20 in the previous week, while the average value traded increased to Sh13.9 billion from Sh7.7 billion in the previous week.
Treasury bills auction received bids worth Sh20.3 billion against an advertised amount of Sh24 billion, representing a performance of 84.8 per cent, while interest rates on the Treasury bills remained stable, only rising marginally.
At the Nairobi Securities Exchange, the NASI, NSE 25 and NSE 20 share price indices rose by 4.2 per cent, 3.5 percent and 0.9 per cent respectively, same to market capitalisation, equity turnover and total shares traded which rose by 4.2 per cent, 56.8 per cent and 45 per cent respectively.
Secondary market
Turnover of bonds in the domestic secondary market increased by 709.9 per cent during the week. In the international market, yields on Kenya’s Eurobonds declined by an average of 14.8 basis points.
The International Monetary Fund approved a 38-month programme which will see Kenya receive a total of Sh255.1 billion in loan support.
The country was expected to see its initial disbursements totaling to Sh33.5 billion almost immediately.
The IMF said the programme, which reached a staff level agreement earlier in February this year, charts a clear path to reduce Kenya’s debt-related risks.