International oil prices increased during the week ending July 6, according to the Central Bank of Kenya (CBK) weekly bulletin. The hike was attributed to an increase in oil demand and reduced global supply by major oil exporters.
Murban oil price increased to USD 77.66 per barrel on July 6 from USD 74.93 per barrel on June 29. In 2022, Murban oil accounted for about 63% of Kenya’s total crude oil imports.
Despite the increase in global oil prices, Kenya’s economy grew by 5.3% in the first quarter of 2023, compared to 6.2 within a similar period last year. The CBK attributed the growth to a rebound of the agricultural sector and the continued resilience of service sectors.
“The agricultural sector expanded by 5.8 per cent in the first quarter of 2023, compared to a contraction of 1.7 per cent in a similar period in 2022. The services sector expanded by 6.5 per cent compared to 8.9 per cent within a similar period in 2022. The manufacturing sector grew by 2.0 per cent compared to 3.8% within a similar period in 2022,” CBK reported.
The economic stability caused the Kenyan shilling to remain stable against major regional and international currencies. The shilling exchanged at ksh 140.78 per US dollar on July 6 compared to ksh 140.45 per US dollar on June 29.
Meanwhile, the country’s forex reserves remained adequate at $7, 462 million as of July 6. These reserves meet the CBK’s statutory requirements for the country to retain at least 4 months of import cover.
Markets
Bonds turnover in the domestic secondary market declined by 26.5% during the week ending July 6. However, yields on Kenya’s Eurobonds in the international market increased by an average of 31.5 basis points while the 2024 maturity increased by 70.8 basis points.
At the Nairobi securities exchange, the NASI, NSE25, and NSE 20 share prices increased by 1.5 per cent, 2.4 per cent, and 2.6 per cent, respectively, during the week ending July 6.
Additionally, market capitalization, equity turnover and total shares traded increased by 1.5 per cent, 80.2 per cent, and 91.0 per cent, respectively.
At the same time, liquidity in the money market increased during the week ending July 6, supported by government payments. Commercial banks’ excess reserves stood at Ksh 37.4 billion in relation to the 4.25 per cent cash reserves requirement (CRR).
The CBK further stated that “The average interbank rate was 9.53 per cent on July 6 compared to 10.05 per cent on June 29. During the week, the average number of interbank deals increased to 34 from 31 in the previous week, while the average value traded increased to Ksh 14.9 billion from Ksh 13.8 billion in the previous week.”
The Kenyan economy is projected to grow by an average of 5.2% in 2023, according to Cytonn’s H1 2023 markets review.
Globally, inflation concerns in advanced economies continue to moderate. Global equity markets underperformed during the week ended July 6, reflecting market concerns over weakening global demand.
The US dollar index weakened by 0.2 percent against a basket of major currencies during the week ending July 6, according to data from the Central Bank of Kenya.
