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Inflation stabilises as equity turnover, shares traded soars

By Lewis Njoka
Monday, September 7th, 2020
NSE 20-Share Index recorded a 4.63 per cent decrease to close the quarter at 1,852.29. Photo/PD/FILE
In summary

MONEY:  Kenya’s economy which has been hit hard with Covid-19 shocks is gradually gaining momentum going by weekly economic indicators from the Central Bank of Kenya (CBK).

In its weekly monetary and financial indicators update, CBK notes that the number of shares traded at Nairobi Securities Exchange (NSE), equity turnover and market capitalisation surged by 5.3 per cent, 24.6 per cent and 2.8 per cent, respectively during the week ending September 3.

The lender of last resort also updated that the NASI, NSE 25 and NSE 20 share price indices rose by 2.9 per cent, 3.3 per cent and 4.6 per cent, respectively.

The report notes that Kenya’s money market remained liquid, supported by government payments, which offset tax receipts.

Commercial banks’ excess reserves stood at Sh37.0 billion in relation to the 4.25 per cent cash reserves requirement while the average interbank rate was 3.07 per cent on September 3 compared to 3.01 per cent on August 27.

Overall inflation remained stable at 4.4 per cent in July and August, driven by lower food prices following increased supply resulting from favorable weather conditions.

Food inflation declined to 5.4 per cent from 6.6 per cent in July, offsetting the impact of the increase in fuel inflation which surged in August to 10.7 per cent from 8.7 per cent the previous month.

According to the CBK’s weekly indicators, the shilling remained relatively stable against major international and regional currencies during the week.

“It exchanged at Sh108.30 per US dollar on September 3, compared to Sh108.15 per US dollar on August 27,” says CBK.

Foreign exchange reserves that can easily be used remained adequate at $8,865 million – which is an average 5.38 months of import cover -- as at September 3.

“This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover,” said CBK.

The average number of interbank deals per day declined to 23 from 27 in the previous week, while the value traded declined to Sh11 billion from Sh16.7 billion in the previous week.

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