NAIROBI, Kenya, Jun 1 – Liquidity in Kenya’s money markets eased during the month of May with the average interbank rate declining to 4.1 percent, from 5.3 percent recorded in April, according to a report by Cytonn Investments.
The company said the liquidity was mainly supported by government payments and tax refunds done during the month, and the reduction of the Cash Reserve Ratio to 4.25 percent, from 5.25 percent previously, by the Monetary Policy Committee (MPC) during its March 2020 sitting.
According to the investment firm, the reduction in cash reserve ratio freed up Sh35.2 billion to provide additional liquidity to commercial banks for onward lending to distressed borrowers during the COVID-19 pandemic.
In the past week, the average interbank rate declined to 3.5 percent from 4.2 percent recorded the previous week, due to increased liquidity in the money markets due to pending bill payments and tax refunds.
“The average interbank volumes rose by 80.4 percent to Sh20.7 billion, from Sh11.5 billion recorded the previous week,” Cytonn Investments said.
