|
|
Kenya: Central Bank Cash Injection Eases Market Liquidity
 |
|
|||||||||
|
||||||||||
Business Daily (Nairobi)
14 May 2008
Posted to the web 14 May 2008
Millicent Kamau
The Central Bank of Kenya (CBK) last week injected Sh6 billion into the market in an attempt to ease liquidity.
Following massive subscription of the Safaricom IPO -382 per cent -about Sh115 billion is held up in receiving banks, tightening the flow of cash in the economy.
"The Safaricom IPO mopped up liquidity in the market causing liquidity to tighten in banks," said Mr Charles Ochola, head of investment banking and fund management, Suntra Investment Bank.
Equity Bank, National Bank of Kenya (NBK), Postbank and Citi Bank were the receiving banks for the IPO. Dealers expect interbank interest rates to rise until the situation normalises.
"Tightened liquidity increases the interest rates from inter-bank lending to consumer lending," said James Mutuko, head of assets liability management East Africa at Standard Chartered bank.
According to CBK's weekly bulletin, a total of Sh11.4 billion was borrowed by commercial banks from the CBK through the overnight window to cater for tightened liquidity.
Dealers said the Sh6 billion injection had eased up liquidity and could temper interest rate movements but more injections may be needed.
"Compared to the amount of money that Safaricom mopped up from the market, CBK's injection plus the loan allocation is still not enough. CBK might be forced to inject more in a week's time," Mr Ocholla said.
But by beginning of June, market liquidity is expected to increase as foreign and institutional investors will be paying for the Safaricom share allocation.
|
"Once foreign and institutional investors start paying for their allocation, liquidity might go up hence law interest rates," said Mr Mutuko.
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Copyright © 2008 Business Daily. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Make allAfrica.com your home page | RSS Feed | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Top | Site Guide | Who We Are | Advertising | Search | Subscribe | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Questions or Comments? Contact us. Read our Privacy Statement. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
