The shilling was a touch stronger at the close of the week, well supported by sufficient flows that kept demand in check. Major players quoted the shilling at 3540/50.
In the fixed income space, the high liquidity levels in the market kept a lid on yields as commercial banks continued to place huge amounts in the government securities as the lending market that would otherwise be the alternative channel, remained subdued. Yields played out at 7.298%,8.869% and 10.150% for 91, 182 and 364 days respectively.
In the regional currencies, the Kenya shilling was relatively stable, but market players expected it to weaken on resurgence of demand as well as negative sentiment around the global economy that continues to dent risk appetite. KES was quoted at 108.60/80
In the global markets, the US dollar held most gains against a basket of currencies following hawkish comments from the US Federal Reserve that led markets to move forward. The key signal indicating that conditions for an interest rate hike could be met in the late 2022, setting the stage for a move in early 2023 played in favor of the greenback.
The interim trend of the local currency suggest a stable tone, with major markets players choosing to remain square ahead of the policy rate announcement expected on 16th August 2021.
July 30 – August 6, 2021: Weekly financial markets review and outlook with Stephen Kaboyo
Stephen Kaboyo, Founder and Managing Director Alpha Capital Partners