MONEY MARKET ANALYSIS
This week, the average lending rate slipped to 11.5% from 11.8%, offering some breathing room for borrowers in the interbank market. Meanwhile, interbank volumes soared, more than doubling to KES 54.36bn from KES 27.16bn, as transaction count spiked 34.6%. Interestingly, after a month of dormancy, the discount window reopened, recording KES 0.79bn in trades, signaling desperate liquidity maneuvers by some players.
The table below summarizes the market liquidity indicators:
Open market operations picked up steam this week, with bank bids skyrocketing to over KES 130.0bn from KES 46.90bn the previous week. The Central Bank played its part, accepting roughly KES 80.0bn, which more than balanced out maturities of KES 31.0bn. This resulted to a net liquidity boost of approximately KES 49.0bn, keeping the financial gears well-oiled.
Notably, the weighted average interbank rate has closely aligned with the Central Bank Rate in recent weeks, with actual highs and lows remaining well within the interest rate corridor, exhibiting no deviations. See the chart below;
