CBK

FeaturedNews
Otiato Guguyu

Bankers caught in the domino effect of the falling shilling

Kenyan banks find themselves in a tough spot, akin to a deer ensnared in the piercing glow of headlights. They are burdened by substantial amounts of government debt and defaulted government supplier debt. To compound matters, their ventures into foreign exchange have become a costly gamble, with a staggering 23.8 percent surge in expenses triggered by the falling Kenyan shilling.. In psychology, it is recognized that, like animals, humans tend to freeze in response to acute stress, an instinct aimed at enhancing risk assessment and decision-making abilities. However, this instinct can lead to paralysis, leaving individuals unsure of how to proceed. Kenyan lenders are facing…

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dollarization
FeaturedNews
Dredan Njau, Maryline Josephine and Kaunga Junior

Kenya inches closer to full-scale dollarization

The gradual shift towards dollar payments in Kenya, observed across various sectors, has raised concerns about the intensifying trend toward the dollarization of the country’s economy. This movement has been fueled by the persistent weakening of the Kenyan shilling against the US dollar over the past year, showing little to no signs of improvement. Dollarization typically involves the need for a reserve of readily available US dollars to replace the existing monetary base and establish a liquidity cushion denominated in US currency. This cushion often amounts to approximately 20 percent of total bank deposits and serves as a safeguard against potential banking system crises or…

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MarketsNews
Otiato Guguyu and Maryline Josephine

Why banks will beg for your deposits

Kenyans have a huge opportunity to set the price of their savings as banks, desperate for cash, lure deposits in a market with very competitive options. Deposit rates have jumped to 7.8 percent in June, a five year high as Banks scrambled for investors to deposit money in their accounts to facilitate their fractional lending. Fractional Banking is a banking system that requires banks to hold only a portion of the money deposited with them as reserves. The banks then use the customer deposits to make new loans. For a long time Banks have been holding the upper hand given the healthy supply of money…

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MarketsNews
Otiato Guguyu

CBK announces end of bank interest rate party

The Central Bank of Kenya may begin to reject expensive short-term bids at the domestic market after receiving a notice from the Treasury on plans to cut the domestic borrowing target from Kes586.5 billion to Kes316 billion. Banks have been pricing loans to the government expensively given the pressure to repay maturing loans and slow tax receipts that have sent bond rates approaching 17 percent while short-term treasury bills are rising above  consumer lending rates. Oversubscribed Treasury Bills At the latest auction, investors oversubscribed the three-month Treasury Bills by 1,044 percent. They were demanding 13.1 percent only for CBK to accept Kes41.6 billion overpriced bids against a target…

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In Brief

CBK retains key rate at 10.5 percent

The Central Bank of Kenya (CBK) has maintained its benchmark lending rate at 10.5 percent in the latest review by the Monetary Policy Committee, citing falling inflation on favorable weather conditions. “Inflation is already within the target band, and is expected to decline further as food inflation is expected to come down,” the committee said in a statement. Kenya’s inflation declined to 7.3 percent in July 2023 from 7.9 percent in June, driven by lower food and non-food non-fuel inflation. At 7.3 percent, the country’s rate of rise in the cost of living within policymaker’s target range of 5 ±2 per cent. GDP data for

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William Ruto in Paris
Featured
Otiato Guguyu

Inflation worse than default

I have always found networking weird, the idea of meeting strangers for the first time and being put on the spot to say what I do for a living. It makes me ask myself uncomfortable questions on what I really do for a living. As I fumbled with my introductions when I found myself at a panel session on implementing and financing renewable Energy projects in Africa organized by Canada, I sought refuge at the margins, where I could nod and smile kindly at passing strangers without having to do the work. Being a journalist who is not attached to a big media house is…

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