Money Markets
The Central Bank building in Nairobi. PHOTO | FILE
By GEOFFREY IRUNGU
In Summary
- The daily mopping up has been going on even as jitters persisted in the interbank market as rates continued to climb by the day.
The Central Bank of Kenya (CBK) slowed down its
liquidity mop-up in the financial markets beginning last week, with no
repurchasing agreements (Repos) carried out from October 29. The last
time the regulator went a day without mopping up cash from the market
was October 2.
Since then, mopping has been regular ranging from about Sh1
or Sh2 billion to as high as over Sh8 billion daily, according to the
CBK Weekly Bulletin. The daily mopping up has been going on even as
jitters persisted in the interbank market as rates continued to climb by
the day.
“As of yesterday, the CBK was also out of the
market, but this only seemed to push the interbank market higher to 7.5
per cent,” Citi bank said.
As at October 29, the interbank rate stood at 7.43
per cent, having risen from 7.26 per cent at the beginning of the week.
This was an increase from 5.8 per cent in the middle of October. It
remains to be seen how the shilling reacts in the absence of the Central
Bank, whose operations were partly meant to support the currency.
In a statement two weeks ago, Standard Chartered
Bank head of research on Africa Razia Khan had said the monetary
authority could be following “a tightening bias” without necessarily
changing the Central Bank Rate.
She noted the Monetary Policy Committee had
actually promised to use open market operations such as repos in
pursuing a tightening bias to stem any inflationary pressure after it
hit 8.36 per cent in August – passing the upper 7.5 per cent policy
limit.
Inflation has in October come down to 6.43 per cent
from 6.60 per cent in September. The government is currently under
pressure to reduce the cost of living since it is one of the reasons
cited in calls for a referendum
No comments :
Post a Comment