MONEY MARKET ANALYSIS
Interbank lending waned during the week, with average traded volumes dropping by 28.6% to KES 16.65bn from KES 23.31bn the previous week. This was accompanied by an 11.8% fall in the number of transactions. Meanwhile, the average interbank rate rose marginally to 9.94%, from 9.91%, further reflecting lower liquidity compared to the previous week. The table below summarizes the market liquidity indicators:
In April, interbank volumes increased by 9.1% month-on-month (m/m), while the average interbank lending rate declined by 25 basis points. This was largely attributed to the reduction in the Central Bank Rate (CBR) and the narrowing of the interbank rate corridor from ±150 basis points to ±75 basis points relative to the policy rate. See the chart below:
Interbank rates remain firmly anchored to the Central Bank Rate, with the highs slightly above the policy rate and the lows closer to the rate but squarely within the corridor. See the chart below;
