Foreign Exchange Reserves

The usable foreign exchange reserves stood at USD 7,459 million (4.11 months of import cover). This meets CBK’s statutory requirement to endeavor to maintain at least 4.0-months of import cover but still falls short of EAC region’s convergence criteria of 4.5-months of import cover.


The Kenyan Shilling depreciated against the Dollar, the Sterling Pound and the Euro to exchange at KES 139.87, KES 177.18 and KES 151.89 respectively. The observed depreciation against the Dollar is attributed to a high demand for the currency, which has caused a market shortage.

CurrencyYTD ChangeW-o-W Change
Sterling Pound19.13%1.91%


Liquidity in the money markets tightened, with the average interbank rate increasing from 9.20% to 9.57%, as tax remittances more than offset government payments. Remittance inflows totaled $352.11 million in May 2023, a 9.92% increase from $320.32 million in April 2023 and a 3.66% rise from $339.68 million in May 2022. Open market operations remained active.

LiquidityWeek (previous)Week (ending)
Interbank rate9.20%9.57%
Interbank volume (billion)14.258.72
Commercial banks’ excess reserves (billion)28.3065.90

Fixed Income


T-Bills were under-subscribed during the week, with the overall subscription rate recorded as 94.18%, down from 137.95% performance recorded in the previous week. The 91-day T-Bill received the highest subscription rate at 454.86% while the 182-day T-Bill and 364-day T-Bill had a subscription rate of 26.64% and 17.46% respectively. The acceptance rate decreased by 51.79% to close the week at 46.80%.


In the secondary bond market, there was a lower demand for the week’s bond offers. Bond turnover decreased by 45.30% from KES 7.41 billion in the previous week to KES 4.06 billion. Total bond deals decreased by 26.91% from 405 in the previous week to 296.

In the primary bond market, CBK released the results of the newly issued 7-year infrastructure bond; IFB1/2023/017 which sought to raise KES 60 billion. The issue was over-subscribed receiving bids worth KES 220.52 billion, representing a performance of 367.53%. KES 213.40 billion worth of bids were accepted at a weighted average rate of 15.84%.


In the international market, yields on Kenya’s Eurobonds decreased by an average 0.66% compared to the previous week, 1.18% month to date and increased 0.33% year to date. The yield on the 10- Year Eurobond for Angola increased. Below is a summary analysis of performance for individual bonds.

BondYTD ChangeM-o-M ChangeW-o-W Change
2014 10-Year Issue0.21%-2.39%-1.27%
2018 10-Year Issue0.49%-0.98%-0.60%
2018 30-Year Issue0.10%-0.56%-0.26%
2019 7-Year Issue0.40%-1.65%-0.99%
2019 12-Year Issue0.33%-0.77%-0.43%
2021 13-Year Issue0.42%-0.77%-0.41%

NASI, NSE 25 and NSE 20 settled 5.19%, 1.84% and 3.80% lower compared to the previous week bringing the year to date performance to -21.20%, -6.61% and -16.05% respectively. Market capitalization lost 5.20% from the previous week to close at KES 1.56 trillion recording a year to date decline of 21.26%. The performance was driven by losses recorded by large-cap stocks such as Safaricom, KCB and EABL of 10.24%, 7.39% and 3.93% respectively.

The Banking sector had shares worth KES 336.8M transacted which accounted for 54.83% of the week’s traded value, Manufacturing & Allied sector had shares worth KES 195.9M transacted which represented 11.87% and Safaricom, with shares worth KES 511.6M transacted represented 31.01% of the week’s traded value.

Top Gainers and Losers in the Equities Markets

Top GainersYTD ChangeW-o-W
HF Group57.46%9.73%
Williamson Tea24.53%7.12%
LosersYTD ChangeW-o-W
E.A Portland-16.47%-8.09%

Alternative Investments

Week (previous)Week (ending)% Change
Derivatives Turnover (million)0.836.97741.19%
Derivatives Contracts189-50.00%
I-REIT Turnover (million)0.160.47191.95%
I-REIT deals5654-3.57%

Global and Regional Markets

Global MarketsYTD ChangeW-o-W
S&P 50015.31%2.58%
Dow Jones Industrial Average (DJI)3.52%1.25%
FTSE 100 (FTSE)1.17%1.06%
STOXX Europe 6007.51%1.48%
Shanghai Composite (SSEC)5.03%1.58%
MSCI Emerging Markets Index7.01%2.76%
MSCI World Index13.90%2.66%
Continental MarketsYTD ChangeW-o-W
FTSE ASEA Pan African Index-4.36%-5.12%
JSE All Share6.84%2.00%
NSE All Share (NGSE)14.35%5.49%
DSEI (Tanzania)-2.91%-0.30%
ALSIUG (Uganda)-15.01%-1.50%

US indices closed the week green, buoyed by substantial surges in major tech giants like Apple, Microsoft and Facebook, all achieving record highs. Notably, treasury yields experienced a decline following the release of May’s economic data, which revealed a surge in sales, a decrease in import prices and jobless claims remaining unchanged but surpassing economists’ expectations. These indicators collectively indicated a potential easing of inflationary pressures. Moreover, the unchanged interest rate instilled hopes that the Federal Reserve’s approach may not be as hawkish as initially feared, despite their projection of two additional rate hikes this year.

European stock markets closed the week on a positive note, driven by the impressive performance of luxury stocks like LVMH (Moët Hennessy Louis Vuitton) and Richemont. Additionally, defensive stocks, including healthcare and utilities, reached a four-week high amid the dominant trend of major central banks adopting a more stringent policy stance.

Asia Pacific indices ended the week on an upward trajectory, taking cues from the two major central banks in the region. The Bank of Japan’s decision to maintain ultra-low interest rates and the People’s Bank of China’s reduction in borrowing costs contributed to the positive market sentiment. However, substantial gains were somewhat constrained due to concerns surrounding deteriorating economic conditions and escalating interest rates in other parts of the world, particularly in the US.

On the global commodities markets, Crude Oil WTI and ICE Brent Crude closed the week 2.29% and 2.43% higher at $71.78 and $76.61 respectively. Gold futures prices settled 0.30% lower at $1971.20.

Week’s Highlights

  • The 2023/2024 Budget Statement presents significant tax policy proposals to boost revenue generation. Key highlights include a significant increase in VAT on petroleum products to 16% while exempting LPG products. Income tax reforms introduce new rates of 32.5% and 35% for income brackets above KES 500,000. Contributions to the National Housing Development Fund will be mandatory for both employees and employers. Withholding tax will be applicable to digital content monetization and sales-related services. Turnover tax rates will rise, except for businesses with income exceeding KES 25M per annum. The implementation of an electronic tax invoice management system (eTIMS) is required for all businesses, ensuring proper invoice generation. Other changes include adjustments to excise duty, remittance of withholding tax and withholding VAT, tax amnesty, VAT exemptions for exported services, reduced rental income tax rate, import declaration fees, railway development levy and the introduction of an export and investment promotion levy. Interest limitation rules will only be applicable to foreign loans.
  • The Energy and Petroleum Regulatory Authority (EPRA) published its monthly statement outlining the maximum retail prices of petroleum products, effective 15th June 2023 to 14th July 2023. Notably, super petrol and diesel experienced a reduction in pump prices by KES 0.66 and KES 1.12 to KES 182.04 per litre and KES 167.28 per litre respectively. Conversely, kerosene observed an increase of KES 0.35 to KES 161.48 per litre.
  • The US Federal Reserve, as anticipated, kept the funds rate target steady at 5%-5.25%. However, they signaled a potential increase to 5.6% by year-end if the economic and inflationary pressures persist. This decision marks the first pause in a series of ten consecutive rate hikes that had brought borrowing costs to their highest level since September 2007. Forecasts show an upward revision of the funds rate to 5.6% for this year, exceeding the earlier projection of 5.1% in March. Similar revisions were made for 2024 and 2025. GDP growth is now expected to reach 1% this year, surpassing the previous estimate of 0.4% in March. However, growth forecasts for 2024 and 2025 were slightly revised downwards.
  • The European Central Bank (ECB) raised interest rate by 25 basis points during its June meeting, the eighth consecutive rate hike, despite the Eurozone being in a recession and inflation remaining above target. This brings the main refinancing rate to 4%, the highest level since 2008 and the deposit facility rate to 3.5%, a 22-year high. The ECB revised its inflation forecasts upwards and slightly lowered growth projections for the near future. The government emphasized the need for further rate increases, signaling a continuation of the tightening cycle in July. The ECB has implemented an unprecedented 400 basis point rate hike over the past year, representing the fastest tightening pace in its history.
  • US inflation rate fell to 4.0% in May 2023, reaching its lowest point since March 2021 and slightly below market expectations. This decline was attributed to a decrease in energy prices. The core inflation rate, which excludes volatile items such as food and energy, also decreased to 5.3%, the lowest since November 2021. These figures support the argument for the Federal Reserve to consider pausing its current monetary tightening cycle. Energy costs experienced a significant slump, while food inflation slowed down. On a monthly basis, consumer prices rose by 0.1% in May following a 0.4% increase in April.
  • The Eurozone inflation stood at 6.1% in May 2023, the lowest since February 2022. Despite this decline, inflation remains significantly above the European Central Bank’s target of 2.0%. The decrease in energy prices contributed to the easing inflationary pressures, along with slower cost increases for food, alcohol, tobacco, non-energy industrial goods and services. The core inflation rate, which excludes volatile components, also decreased to 5.3%, indicating a moderation in underlying price pressures. While inflation has moderated slightly, it remains a concern, highlighting the ongoing need for vigilance in monetary policy to ensure price stability in the Eurozone.
  • The UK economy showed a modest growth of 0.1% in Q1 of 2023, matching expectations and maintaining the same pace as the previous quarter. The services sector saw positive growth, particularly in information and communication as well as administrative and support services. Construction and manufacturing also experienced slight expansions. However, sectors like education, health, public administration, defense and transport faced contractions. Household spending remained stagnant due to inflationary pressures, while gross fixed capital formation made a positive contribution, driven by business and government investments. Public expenditure decreased and both exports & imports declined. Despite the growth, the UK economy still lags 0.5% below pre-pandemic levels.
  • The Eurozone economy unexpectedly contracted by 0.1% in Q1 of 2023, entering a slight technical recession. This decline was in contrast to earlier expectations of a modest 0.1% growth. Household expenditure decreased due to high inflation and borrowing costs, while governments reduced public spending as they scaled back stimulus measures. However, there were some positive signs as gross fixed capital formation rebounded and there were slight decreases in both exports and imports. Germany and the Netherlands experienced contractions in GDP, while France, Italy and Spain recorded modest expansions.

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