Kenya’s financial outlook steady amid strong Treasury bill demand and stable shilling - CBK
Foreign exchange reserves were reported at $10,749 million (Sh1.39 trillion), equivalent to 4.7 months of import cover.
The Central Bank of Kenya has reported a stable shilling, a liquid money market, and a strong performance in the Treasury bill auction, reflecting steady financial conditions during the week ending July 24, 2025.
In its latest weekly bulletin, the CBK said the Kenya shilling held firm against key global and regional currencies.
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The local currency was exchanged at Sh129.26 per US dollar on July 24, slightly weaker than Sh129.24 recorded on July 17.
Foreign exchange reserves were reported at $10,749 million (Sh1.39 trillion), equivalent to 4.7 months of import cover.
“This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover,” the bulletin stated.
The money market remained liquid throughout the week, with active open market operations.
Commercial banks held Sh8.7 billion in excess reserves, above the 3.25 per cent cash reserve ratio threshold.
The average interbank rate stood at 9.62 per cent, compared to 9.64 per cent the previous week.
Interbank activity remained steady, with the average number of deals at 17, while the average value traded rose to Sh 13.7 billion from Sh12.4 billion the previous week.
The government securities market also performed strongly.
The July 24 Treasury bill auction attracted KSh 40.0 billion in bids, against a target of Sh24.0 billion.
This represented a performance rate of 166.7 per cent. During the week, interest rates on the 91-day, 182-day, and 364-day Treasury bills dropped slightly.
In the equity market, all major indices posted gains. The NASI, NSE 25 and NSE 20 indices went up by 1.6 per cent, 1.2 per cent, and 1.4 per cent, respectively.
Market capitalisation rose by 1.6 per cent, while equity turnover surged by 48.8 per cent.
The total number of shares traded increased by 4.4 per cent.
However, the domestic bond market saw a drop in activity.
“Bond turnover in the domestic secondary market decreased by 25.4 per cent during the week ending July 24,” the bulletin noted.
Internationally, Kenya’s Eurobond yields dropped by an average of 47.0 basis points.
Eurobond yields for Angola and Côte d’Ivoire also declined during the same period.
On global trends, the CBK highlighted persistent inflation concerns.
“In the Euro Area, headline inflation rose slightly to 2.0 per cent in June from 1.9 per cent in May, while core inflation held steady at 2.3 per cent.”
The European Central Bank kept interest rates unchanged at 2.15 per cent in its July 24 meeting.
Meanwhile, the US dollar Index fell by 1.4 per cent, and Murban oil prices eased to $69.56 (Sh8,900) per barrel, down from $70.71 (Sh9,100) the previous week.
This was attributed to growing optimism around a potential trade deal between the US and the European Union.
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