Last week, the shilling strengthened marginally against the US Dollar closing the week at 128.5 from 129.5 the previous week.
- The shilling’s 0.8% uptick advanced the year-to-date performance to 17.9% from 17.2% the week before.
- According to Bloomberg, prices of Kenya’s five-year CDS is at the highest since February 13th, 2024, pointing to investors’ jittery sentiments following the withdrawal of the controversial finance bill amid the country’s worrying fiscal position.
- Consequently, yields on Kenya’s Eurobond increased by 8 basis points week on week, falling slightly short of the all-time high in April 2024, confirming the deteriorated investor sentiments.
With the growing risk of Kenya’s fiscal sustainability at hand, investors are jumping to credit default swaps as a hedge against potential defaults.
The equities market closed the week on a bearish note, signaled by the Nairobi All Share Index (NASI), which fell marginally by 0.4% to close the week at 109.02. However, the year-to-date performance stalled 18.4%, signaling overall recovery.
Liquidity conditions in the interbank market tightened with the average interbank rate jolting higher to 13.33% from 13.30% recorded a week prior, attributed to government payments outpacing tax remittances. The interbank rate trailed within the adjusted CBK range with market operations remained active.
Kenya’s usable forex reserves dropped slightly to US$ 7,775 million, enough to maintain 4 months of import cover from US$ 7,800 million the previous week.
