Last week, Kenya’s forex reserves shot up 18.7% to US$ 8,321 million, enough to cover 4.3 months of import cover from US$ 7.012 million, the highest in two years.
- The current reserves meet the CBK’s statutory requirement of 4 months albeit below the EAC’s convergence requirement of 4.5 months of import cover.
- The uptick is on the back of inflows from the US$ 1.2 billion Development Policy Operations (DPO) World Bank loan that was to be channeled towards settling the June 2024 Eurobond.
- During the week, the shilling strengthened 0.1 percent against the US dollar to 128.55 from 128.66 the week before, taking the year-to-date performance to 17.8 percent, according to data from CBK.
This continues the shilling’s bullish trend with investors portraying improved confidence buoyed by the Eurobond settlement and CBK’s hawkish stance.
Treasury bills remained substantially undersubscribed, recording a slacked subscription rate of 60.0 percent from 94.7 percent recorded in the previous week. The 91- day paper remained the most demanded paper with the subscription rate clocking 147.9 percent on account of increased investor demand on short term papers as a hedge against prevailing market risks amid delayed rate cuts from both domestic and major economies.
Liquidity conditions in the interbank market tightened with the average interbank rate jolting higher to 13.07% from 13.04% recorded a week prior. The interbank rate trailed within the adjusted CBK range.
