Kenya’s GDP is projected to grow at 5.2%, weighed down by sustained inflationary pressures, a slow recovery in agricultural sector performance and downstream effects of an unstable global market.


During the quarter, the Shilling slumped further against the US dollar, as the country faced dollar scarcity. The shortage stems from a mismatch between demand from energy and commodity importers and expected inflows from agricultural exports and the service industry. The weak interbank foreign exchange market, combined with parallel trading for the dollar, produced rates that differed from those quoted by CBK, resulting in wider dollar spreads.


During the quarter, inflation averaged 9.13%, with February snapping the three-month downward trend. The period was characterized by rising electricity prices and a sustained increase in gas/LPG prices in February and March. Food prices remained elevated following erratic rainfall patterns.


Liquidity in the money markets generally tightened over the quarter, with only a few stray days of eased flow of funds.


NASI, NSE 20 and NSE 25 contracted 11.45%, 3.18% and 5.49% over the quarter. The bourse witnessed record lows in terms of valuation with market capitalization dipping to Kshs 1.61 trillion on 17th March 2023, representing a year-to-date decline of 18.84%.


Treasury Bills

The overall average subscription rate for the quarter came in at 130.53%, an increase from 116.86% recorded in Q4 2022. Investor preference for the shorter-term 91-day paper prevailed in a bid to hedge against duration risk.

Treasury Bonds

In the primary market, CBK sought a total Kshs 240 billion from bond issuances, a decline from Kshs 272.8 billion targeted in Q4 2022. Average subscription rate dropped 19.42% compared to Q4 2022, attributed to tightened market liquidity.


In the international market, yields on Kenya’s Eurobonds rose by an average of 137 basis points over the quarter. The rise is attributed to S&P downgrading Kenya’s outlook from stable to negative amid strained domestic debt uptake and increased concerns about the country’s debt vulnerabilities.

For a more detailed report on their performance, download the report here.


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