Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 9,094 million (5.56 months of import cover). This meets CBK’s statutory requirement to endeavor to maintain at least 4.0-months of import cover, and the EAC region’s convergence criteria of 4.5-months of import cover.

Currency

The Kenyan Shilling depreciated against the Dollar, but appreciated against the Euro and the Sterling Pound. The weakening of the shilling is attributable to increased dollar demand from energy and merchandise importers.

 Week BeforeWeek After
Dollar111.55111.81
Euro128.86128.42
Sterling Pound151.83150.14

Liquidity

Money markets remained relatively liquid, supported by government payments which partly offset tax remittances. Diaspora remittances increased by 28.2% to USD 337.4 million in October 2021 compared to USD 263.1 million in October 2020. Open market operations remained active.

 Week BeforeWeek After
Interbank rate4.73%4.68%
Interbank volume (billion)5.179.86
Commercial banks’ excess reserves (billion)15.3010.70

Fixed Income

T-Bills

The T-Bills became under-subscribed. The under-subscription is attributable to concurrent bond issuance in the primary bond market.

T-BillYield (% Rate)Subscription Rate
Week BeforeWeek AfterWeek BeforeWeek After
Overall131.14%69.27%
91 day 7.10%7.07%85.89%99.76%
182 day7.55%7.68%87.95%52.02%
364 day8.62%8.75%192.44%74.34%
T-Bonds

The bonds market had high demand for the week’s bond offers. Bonds turnover increased to Kshs 17.94 billion from Kshs 13.16 billion recorded in the previous week.

In the primary bond market, the Treasury issued a new five-year bond and reopened a 20 year bond, FXD1/2021/5 and FXD/2019/20 with coupon rates of 11.28% and 12.87% and effective tenors of 5 years and 17.5 years respectively. Bids worth 80 billion were received, against a target of 50 billion, translating to a performance rate of 168.34%. The government rejected high bids and accepted bids worth 69.51 billion – an acceptance rate of 119.01%.

In the international market, the yields on Kenya’s 10-year Eurobond declined by an average of 13.1 basis points. The yields on the 10-year Eurobonds for Ghana and Angola also declined.

Equities

NASI and NSE 25 increased by 0.31% and 0.67% respectively, while NSE 20 declined by 1.48%. Market capitalization also increased by 0.31% to 2.68 trillion. The performance was driven by gains recorded by large-cap stocks. Top gains were recorded in Equity Group, Kenya Commercial Bank and Diamond Trust Bank Kenya which increased by 5.2%, 2.3% and 1.8% respectively.

The Banking sector had shares worth Kshs 1.1B transacted which accounted for 32.74% of the week’s traded value, Manufacturing & Allied sector represented 8.85%, and Safaricom with shares worth Kshs 1.9B transacted, contributed 55.43%.

Top Gainers and Losers in the Equities Markets

Top GainersW-o-W
HF Group8.64%
CFC Stanbic Bank8.05%
Kakuzi7.79%
BK Group Plc7.55%
Eaagads6.92%
Top LosersW-o-W
Express Kenya-17.06%
Centum-14.16%
Eveready-11.46%
Transcentury Limited-10.00%
Home Afrika-9.76%

Alternative Investments

 Week BeforeWeek After% Change
Derivatives Turnover (million)4.175.7838.44%
Derivatives Contracts5655-1.79%
I-REIT Turnover0.550.54-2.25%
I-REIT Deals5139-23.53%

Global and Regional Markets

Global MarketsW-o-W
S&P 500-0.31%
Dow Jones Industrial Average (DJI)-0.63%
FTSE 100 (FTSE)0.60%
STOXX Europe 6000.68%
Shanghai Composite (SSEC)1.36%
MSCI Emerging Markets1.69%
MSCI World Index-0.26%
Continental MarketsW-o-W
FTSE ASEA Pan African Index0.52%
JSE All Share3.51%
NSE All Share (NGSE)2.95%
DSEI (Tanzania)0.27%
ALSIUG (Uganda)0.12%

European stocks closed the week higher, supported by the overall strength of the quarterly earnings season in Europe and despite a surprisingly strong reading on U.S. inflation, which raised the possibility of the Federal Reserve bringing forward plans to lift interest rates.

U.S. stocks ended the week lower, after U.S. consumer inflation surged to its highest since 1990, raising concerns that the Federal Reserve will tighten monetary policy sooner than expected. CPI rose 0.9% on a monthly basis after rising 0.4% in September, and is expected to rise by 0.6% next month.

Asia Pacific stocks closed the week high after a rebound in Chinese technology shares giving sentiment a boost. U.S. Treasuries continued to fall, with investors concerned that high inflation could prompt central banks to tighten monetary policy faster than expected.

On the global commodities markets, Crude Oil WTI closed the week low by 0.68% and the ICE Brent Crude decreased by 0.69%. Gold futures prices increased by 2.81% to settle at $1,867.85.

Week’s Highlights

  • The Energy and Petroleum Regulatory Authority (EPRA) has retained the retail prices of super petrol, diesel and kerosene at Kshs 129.72, Kshs 110.60 and Kshs 103.54 respectively for the period between 15th November to 14th December 2021.
  • Kenya’s GDP grew by 10.1 in the second quarter of the year, compared to a 4.7% contraction in a similar period last year. The performance was supported by rebounds in most economic activities , following the easing of Covid-19 containment measures. The sectors that supported overall growth in the quarter include manufacturing, education, transport and storage, information and communication, and other services which accounted for 9.6%, 67.6%, 16.9%, 25.2% and 20.2% respectively.
  • The current account deficit widened to 5.6% of GDP in the 12 months to September 2021 compared to 5.0% in a similar period last year. This was as a result of increased import of goods and services which more than offset increased receipts from agricultural exports as well as remittances.
  • Vodacom Group has announced its agreement with Vodafone to acquire 55% of its controlling stake in Vodafone Egypt by issuing 242 million new ordinary shares, subject to regulatory and shareholder approvals. This will cement Vodacom Group’s position as Africa’s leading telco by advancing the strategic connectivity and financial services ambitions.
  • The Kenya Revenue Authorities (KRA) has raised the duty charged on about 30 excisable goods, excluding fuel, by 4.97% to cover the inflationary erosion of collected taxes. The inflation adjustment schedule by KRA Commissioner-General is dated October 25 but was published on November 2, and is awaiting approval by the members of parliament, amid public concern about the high cost of living.

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