Foreign Exchange Reserves

The usable foreign exchange reserves stood at USD 7,148 million (3.80 months of import cover). This falls short of CBK’s statutory requirement to endeavour to maintain at least 4.0 months of import cover as well as the EAC region’s convergence criteria of 4.5 months of import cover.

Currency

The Kenyan Shilling appreciated against the Dollar, the Sterling Pound and the Euro to exchange at KES 130.74, KES 165.71 and KES 142.11 respectively. The observed appreciation against the Dollar is attributed to the increased foreign inflows.

CurrencyYTD ChangeW-o-W Change
Dollar-16.72%-0.80%
Sterling Pound-17.08%-0.50%
Euro-18.17%-0.40%

Liquidity

Liquidity in the money markets slightly tightened, with the average inter-bank rate increasing from 13.67% to 13.76%, as tax remittances more than offset government payments. Open market operations remained active.

LiquidityWeek (previous)Week (ending)
Interbank rate13.67%13.76%
Interbank volume (billion)23.8824.47
Commercial banks’ excess reserves (billion)18.3017.50

Fixed Income

T-Bills

T-Bills were over-subscribed during the week, with the overall subscription rate increasing to 118.65%, up from 65.99% recorded in the previous week. The 91-day T-Bill received the highest subscription rate at 217.29% while the 182-day T-Bill and 364-day T-Bill had subscription rates of 58.70% and 139.14% respectively. The acceptance rate increased by 7.80% to close the week at 91.99%.

T-Bonds

In the secondary bond market, there was a lower demand for the week’s bond offers. Bond turnover decreased by 55.80%, from KES 22.74 billion in the previous week to KES 10.05 billion. Total bond deals decreased by 28.41% from 711 in the previous week to 509.

In the primary bond market, CBK released auction results for the re-opened 5-year FXD1/2023/005 and the 10-year FXD1/2024/010 which sought to raise KES 25.0 billion through a tap sale. The issues received bids worth KES 47.79 billion, representing a subscription rate of 191.15%. Of these, KES 45.85 billion worth of bids were accepted at a weighted average rate of 18.41% and 16.52% respectively.

Eurobonds

In the international market, yields on Kenya’s Eurobonds decreased by an average of 0.03% compared to the previous week, increased by 0.04% month-to-date and decreased by 0.99% year-to-date. The yields on the 10-year Eurobonds for Angola declined while that of Zambia increased. Below is a summary analysis of performance for individual bonds.

BondYTD ChangeM-o-M ChangeW-o-W Change
2018 10-Year Issue-1.35%-0.04%-0.04%
2018 30-Year Issue-0.89%0.07%-0.41%
2019 7-Year Issue-1.850.01%0.01%
2019 12-Year Issue-0.68%0.05%0.05%
2021 13-Year Issue-0.24%0.07%0.11%
2024 6-Year Issue-0.91%0.05%0.08%
Equities

NASI, NSE 25 and NSE 10 settled 0.24%, 0.84% and 1.17% higher while NSE 20 settled 0.25% lower compared to the previous week, bringing the year-to-date performance to 23.26%, 25.69%, 28.28% and 15.86% respectively. Market capitalization also gained 0.24% from the previous week to close at KES 1.77 trillion, recording a year-to-date increase of 23.26%. The performance was driven by gains recorded by large-cap stocks such as EABL, NCBA and Standard Chartered of 6.32%, 3.20% and 1.77% respectively. This was however weighed down by losses recorded by Safaricom, Co-operative and Stanbic of 1.13%, 0.33% and 0.20% respectively.

The Banking sector had shares worth KES 1.6B transacted which accounted for 68.39% of the week’s traded value, the Manufacturing and Allied sector had shares worth KES 41.4M transacted which represented 1.73% and Safaricom, with shares worth KES 657M transacted represented 27.52% of the week’s traded value.

Top Gainers and Losers in the Equities Markets

Top GainersYTD ChangeW-o-W
Transcentuary11.54%18.37%
Total11.11%10.19%
Home Africa-15.38%10.00%
Olympia13.15%8.82%
Sanlam16.33%8.05%
LosersYTD ChangeW-o-W
BOC Kenya-7.32%-8.98%
Eveready4.24%-8.89%
Kenya Power21.43%-8.60%
Express-13.51%-8.31%
Bamburi19.86%-8.09%

Alternative Investments

LosersWeek (previous)Week (ending)% Change
Derivatives Turnover (million)5.590.59-89.52%
Derivatives Contracts17.006.00-64.71%
I-REIT Turnover (million)5000.00-100.00%
I-REIT deals100.00-100.00%

Global and Regional Markets

Global MarketsYTD ChangeW-o-W
S&P 5009.73%-0.95%
Dow Jones Industrial Average (DJI)3.15%-2.27%
FTSE 100 (FTSE)2.46%-0.52%
STOXX Europe 6005.86%-1.19%
Shanghai Composite (SSEC)3.61%0.92%
MSCI Emerging Markets Index2.05%0.24%
MSCI World Index7.36%-1.03%
Continental MarketsYTD ChangeW-o-W
FTSE ASEA Pan African Index-4.09%-0.39%
JSE All Share-0.93%0.51%
NSE All Share (NGSE)36.12%-1.08%
DSEI (Tanzania)1.32%-0.16%
ALSIUG (Uganda)21.63%-1.14%

US stock markets closed the week in the red zone, as investors digested mixed signals from the latest labour data. While the report showed the strongest job growth in ten months and continued wage gains, the unemployment rate also dipped unexpectedly. This robust data, indicating a tight labour market, aligns with the Fed’s view and weighed down hopes for an immediate interest rate cut.

The European market closed the week on a downward trajectory, weighed down by investors’ concerns over escalating geopolitical tensions in the Middle East following an alleged Israeli strike on Iran’s embassy. Additionally, investors assessed the hawkish comments from some Federal Reserve officials and the higher-than-expected U.S. job data.

Asian stocks closed the week in the green zone, buoyed by rebounding retail sales in Hong Kong and signs of an upswing in private sector activity. Additionally, markets reacted favourably to US Treasury Secretary Yellen’s visit to China, seen as a step towards improving relations between the two economic countries.

Week’s Highlights

  • The Central Bank of Kenya (CBK) held the benchmark lending rate at 13% during its 3rd April meeting. This decision aims to solidify recent progress in curbing inflation, which dipped to a two-year low of 5.7% in March. The Monetary Policy Committee (MPC) expressed confidence in its past measures that addressed exchange rate pressures and inflationary expectations. The committee anticipates inflation to slow down in the near term, supported by lower food and fuel prices alongside a strengthening Shilling. Additionally, the MPC stated that the CBK will remain vigilant, monitoring economic developments and adjusting the rate if necessary.
  • The Stanbic Bank Kenya PMI decreased to 49.7 in March 2024 from 51.3 in February, indicating a slight slowdown in private sector activity. This was primarily driven by fewer new orders and the cash flow challenges faced by businesses. Firms reported easing price pressures, potentially boosting customer spending. Input cost inflation reached its lowest level since February 2021 due to lower fuel prices and a stronger Shilling. Output charge inflation also hit a one-year low. Despite the slowdown, expectations for future output surged to a four-month high in March, driven by the positive inflation trend.
  • Kenya and Ghana signed seven Memoranda of Understanding (MoUs), marking a significant step towards stronger trade links and bilateral ties. These agreements span diverse sectors, including science and technology, tourism, education and governance. Additionally, the visit highlighted progress towards a more integrated Africa. Ghana’s planned abolishment of visa requirements for Africans by year-end echoes Kenya’s recent move, suggesting a more open African continent for trade and investment with smoother movement of people.
  • The Nairobi Securities Exchange (NSE) received a positive upgrade from the FTSE Russell Index Governance Board in March 2024. This move reclassified the Kenyan market from “restricted” to “pass,” reflecting improvements in repatriating capital for investors. The upgrade signifies a vote of confidence in Kenya’s equity market and its continued development. The NSE addressed previous delays faced by institutional investors, a key factor in the FTSE Russell’s assessment. This paves the way for increased investment opportunities and potentially higher liquidity in Kenyan stocks.
  • Euro Area inflation decreased to 2.4% year-on-year in March 2024, a two-year low and below market forecasts of 2.6%. Core inflation, excluding food and energy prices, also fell to 2.9%, its lowest point since February 2022. This was driven by a decrease in energy prices, which declined by 1.8%. Additionally, the pace of price increases moderated for food and for non-energy industrial goods by 2.7% and 1.1% respectively. However, service inflation remained steady at 4.0%. Notably, on a monthly basis, consumer prices rose slightly by 0.8% in March, up from a 0.6% rise in February.
  • The S&P Global US Manufacturing PMI fell to 51.9 in March from 52.2 in February. Despite the moderation, production growth remained robust at a 22-month high. Businesses reported confidence in future output due to expectations of a stronger economy and improved capacity. However, a focus on managing existing inventory led to decreased purchasing activity, while both input and output prices continued to rise, potentially impacting profit margins.
  • The Eurozone HCOB Manufacturing PMI increased to 46.1 in March from 45.7 in February. While output and new orders continue to decline, the rate of contraction slowed to its weakest point in almost a year. Export sales also showed improvement, with the decline at its lowest in nearly two years. Business confidence within the sector reached a near-year high. However, the sector remains in contraction for the twelfth month, with weak growth expectations potentially impacting factory employment. 

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