Last week, the Kenyan Shilling strengthened further against the US Dollar, closing the week at KSh 129.14 from KSh129.54 the previous week.

• The Shilling’s 0.3% uptick lifted the year-to-date performance to 17.5%.
• The marginal strengthening was partly attributed to the high foreign currency inflows from the KSh 50 billion infrastructure bond auction during the week, buoying the shilling’s stability.
• The equities market closed the week on a bullish note, signaled by the NSE All Share Index (NASI), which was up marginally week on week by 0.5 percent to close at 104.5.

Similarly, the year-to-date performance rose to 13.1%, buoyed by marginal gains from large cap stocks during the week. Further, foreign investors flocked into the Nairobi Securities Exchange (NSE), recording a net buying position of KShx  46.5 million. Investor wealth increased by KSh 8.1 billion in the same week.

According to data from Morgan Stanley Capital Index (MSCI), NSE posted 0.3 percent returns in the five days of last week.

Bonds, Money and International Markets

In the international markets, yields on Kenya’s Eurobonds declined by an average 59 basis points, reflecting  investor confidence in the East African nation. 

In the secondary market, the value of bonds traded during the week decreased by 32 percent to KSh 7.2 billion from KSh 10.5 billion recorded a week prior.

Treasury bills were oversubscribed, recording a decreased subscription rate to 107.3 percent from 163.7 percent recorded in the previous week. The 91- day paper remained the most demanded paper with the subscription rate clocking 262.9 percent on account of increased investor demand on short term papers to hedge against duration risk. 

Yields on all the papers saw marginal declines pointing to CBK’s recent move to cut the Central Bank Rate to 12.75 percent from 13.0 percent.

Liquidity conditions in the Money Market eased, with the average interbank rate rising marginally to 12.9% from 13.1% recorded a week prior, partly attributed to tax remittances government payments outpacing. The interbank rate trailed within the adjusted CBK range, with market operations remaining active. 

Forex Reserves and Remittances

Kenya’s usable forex reserves dropped marginally by 0.3 percent to US$7,316 million, enough to maintain 3.8 months of import cover from US$7,340 million the previous week. The decrease is attributable to debt servicing by the government.

The foreign reserves fall below the 4 months statutory requirements and equally lower than the EAC’s convergence requirement of 4.5 months of import cover.

Diaspora remittances edged higher by 11.5  percent to US$414.3 million in July 2024 from US$397.3 million in April 2024. Year on year growth saw a 9.6 percent uptick from US$378.1 million in July 2023, with the US remaining the largest source of remittances to Kenya, accounting for 52 percent.

Cumulative inflows for the 12 months to May 2024 totaled USD 4,572 million compared to USD 4,076 million in a similar period in 2023, an increase of 12.2 percent.