Fusion Capital unveils monthly Africa money markets report

Kenya is facing a liquidity shortfall while her neighbours – Uganda and Tanzania are experiencing an increase,Fusion African Monitor, a new monthly pan African money market report by Fusion Capital has revealed.

According to a report unveiled yesterday, interbank rates in Kenya moved to 4.8 per cent on the last month of June from 3.87 per cent at the beginning of the month.

Since then, the rates have been increasing daily by up to one per cent to yesterday’s 7.6 per cent, a move that is expected to negatively affect loan approval to borrowers as the country moves closer to the election day.

Michael Kimondo, head of treasury at Fusion Capital believes that the trend will change downwards after the elections. ‘’The good thing is that borrowers are protected by the Banking Act 2016 that capped interests at four per cent the Central Bank Rate. Lenders can not pass costs to borrowers,’’ said Kimondo.

The report show that interbank rates in Uganda declined by one per cent to 11.1 per cent at the end of June while declining from 5.7 to 5.3 per cent in Tanzania. Nigeria also recorded a decline to 21.6 per cent.

The report shows short and long term bonds of between three and 20 years in Kenya registered increased yields while yields declined on mid term bonds of five, 10 and 15-years. Last month, M-Akiba, a mobile phone subscribed bond with a maturity period of three years was floated in the market, a move that may have favoured the short term bond.

Infrastructure financing in Kenya has increased Public Private Partnership activities in the recent times, boosting activities in long term bonds of up to 20 years.

In Nigeria yields on short term bonds of three and five years increased, while medium and long term bonds of seven, 10, and 20 years registered a decline in yields.

In June, most African currencies depreciated against the dollar, except Uganda and Nigeria. The Kenyan Shilling depreciated to Sh103.7 from Sh101.63 the previous month. The report blames this depreciation on increased dollar demand from oil exporters. It was exchanging at Sh103.90 against the dollar by the time of going to press.

Just like Kenya, Rwanda which is set to conduct general elections early next month saw its currency depreciate against the dollar. The Rwandan franc depreciated to settle at RWF 836.0 on 30 June 2017. The currency fell 0.9 per cent on MTD basis and 2.4 per cent on YTD basis.

The currency depreciation is due to increased outflow from exporters.

According to the report, Rwanda’s currency is expected to remain weak over the short-term, based on decline in commodity prices and central bank’s decision to cut its key repo rate to six per cent , which could likely weaken market’s confidence in the local currency.

The Ugandan shilling appreciated to UGX3,588.9 per dollar mainly due to reduced dollar demands from corporates. The same is said about the Ghanaian cedi which depreciated against the dollar to GHS 4.4.

Tanzanian shilling depreciated marginally at TZS 2,240.9 against the US dollar based on increased demand for greenbacks from importers. The Nigerian naira on other hand appreciated to reach NGN 314.8 per dollar as part of the central bank’s effort to boost liquidity in the foreign exchange market.

The monthly Report will focus on activities Across Sub Saharan market with a focus on economy and major political events. The report will be covering bond, currency and capital markets.

It will focus on East African Community covering Kenya, Uganda, Tanzania, Rwanda and Burundi. Other countries that will be featured in the report includes Nigeria, Ghana, Ivory Coast, Angola and Mozambique.

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