Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 7,412 million (4.55 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 all major currencies. It depreciated against the Dollar, the Euro and the Sterling Pound. The weakening of the shilling is attributable to increased dollar demand from importers.

 Week BeforeWeek After
Dollar109.65109.86
Euro130.92131.09
Sterling Pound152.63153.17

Liquidity

Money markets remained relatively liquid supported by the government’s payments which partly offset tax remittances.

Remittance inflows increased by 18.9% to $260.2 million in February compared to $219.0 in February 2020. This is in relation to the 4.25 percent cash reserves requirement (CRR). Open market operations remained active.

 Week BeforeWeek After
Interbank rate4.97%5.40%
Interbank volume (billion)12.6713.22
Commercial banks’ excess reserves (billion)11.7021.6

Fixed Income

T-Bills

The Treasury Bills became over-subscribed. The over-subscription in T-Bills is attributable to high demand for bond offers for the month.

T-BillYield (% Rate)Subscription rate
Week BeforeWeek After
Overall94.27%114.99%
91 day 7.071%108.75%135.56%
182 day7.884%60.82%70.99%
364 day9.213%121.92%150.77%
T-Bonds

The bonds market had a high demand for the months bond offers. Bonds turnover decreased to Sh 10.88 billion from Sh 14.13 billion. There were no Treasury bonds offered last week.

Equities

The performance of the NASI was driven by gains recorded by large-cap stocks with the top gains being recorded in Co-operative Bank, Equity Group, Safaricom Plc and KCB Group which increased by 7.3%, 4.1% 4.0% and 3.5% respectively.

The Banking sector had shares worth Kshs 504M transacted which accounted for 29.77% of the week’s traded value, Manufacturing & Allied sector represented 15.48% and Safaricom with shares worth Kshs 778M transacted, contributed 45.88%.

Top Gainers and Losers in the Equities Markets

Top GainersW-o-W
Jubilee Holdings8.88%
Kapchorua Tea8.63%
Co-op Bank7.34%
BK Group7.14%
Unga Limited6.90%
Top LosersW-o-W
Uchumi-14.29%
Liberty Kenya-8.94%
Total Kenya-8.00%
Transcentury-6.67%
Sanlam-6.43%

Alternative Investments

 Week BeforeWeek After% Change
Derivatives Turnover (million)3.211.9272.91%
Derivatives Contracts95299214.74%
I-REIT Turnover (million)0.700.34-51.28%
I-REIT Total Deals394515.38%

Global and Regional Markets

Global MarketsW-o-W
S&P 500-0.77%
Dow Jones Industrial Average (DJI)-0.46%
FTSE 100 (FTSE)-0.78%
STOXX Europe 6000.06%
Shanghai Composite (SSEC)-1.40%
MSCI Emerging Markets Index-0.84%
MSCI World Index-0.39%
Continental MarketsW-o-W
FTSE ASEA Pan African Index-0.76%
JSE All Share-3.63%
NSE All Share (NGSE)-0.69%
DSEI (Tanzania)0.34%
ALSIUG (Uganda)2.39%

European stock markets weakened as a rise in Covid-19 cases and associated lockdowns weighed on recovery hopes. FTSE 100 declined by 78 basis points.

US stocks slumped after the Federal Reserve and Bank of England maintained their policy stances announced by major advanced economies aimed at supporting economic recovery. A spike in US bond yields prompted investors to sell stocks with very high valuations.

On the regional front, South Africa’s JSE all share declined by 3.63% due to the fears surrounding the effects of the AstraZeneca vaccine.

On the global commodities markets, Crude Oil WTI closed the week low by 6.39% and the ICE Brent Crude declined by 6.78%. Gold futures prices increased by 1.27% to settle at $1,741.70.

Week’s Highlights

  • Kenya Power has increased the price of electricity by Ksh1.20 per unit to Sh3.54 per kilowatt-hour as it targets to raise Ksh1 billion this month, citing increased compensation to expensive diesel plants. This comes at a time when petrol prices have hit a nine-year high, thus piling pressure on households.
  • The Nairobi Securities Exchange (NSE) is outperforming peer bourses in Africa this year, boosted by higher share prices among selected blue-chip firms. The NSE All-Share Index has a year-to-date gain of 6.6%, putting it ahead of fellow exchanges in Egypt, Nigeria, Morocco, Tunisia, which together with the NSE are considered to be in the second tier in Africa, behind South Africa’s Johannesburg Stock Exchange which is the only one classified as tier one.
  • Debt repayments have increased by 32.13% to 638.3 billion in the eight months to February 2021, to become the largest single expenditure from the exchequer. Servicing costs have for the first time surpassed recurrent expenditures such as salaries and government administrative expenses, underlining the pressing burden on taxpayers.
  • A parliamentary committee has approved regulations that will see motorists enjoy diesel subsidy amid soaring fuel prices. The regulations give the petroleum cabinet secretary power to cut diesel prices and cushion motorists from sharp spikes when the cost of crude oil exceeds $50 per barrel.
  • Foreign investors looking to put capital in bank stocks at the Nairobi Securities Exchange (NSE) remain wary of the sector’s increasing non-performing loans, despite their current valuations presenting attractive entry points.

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