– 31st August022
The Money Market Fund maintained a gross yield of 0.9% in August 2022 and 11.3% over twelve months. High-yielding deposits supported by the current high-interest rate the environment continues to bolster the overall yield of the fund. Bond yields in Kenya remained relatively unchanged across the yield curve in the month of August. On a year-to-date (YTD) basis, however, yields have shifted upwards on all bond tenures. In August, The Central Bank of Kenya (CBK) re-opened a 3-year,10-year, and 20-year bond at weighted average yields of 12.4%, 13.9%, and 14.0% respectively.
The Kenyan Shilling depreciated 1.1% in August driven by increased dollar demand from oil and merchandise importers. The shilling has depreciated 5.7% YTD to the end of August 2022. We expect further currency depreciation on account of higher global commodity prices coupled with the projected strengthening of the US Dollar as rates in developed economies continue to hike.
Kenya’s inflation marginally rose to 8.5% year-on-year (y/y) in August 2022 from 8.3% y/y in July 2022. The main contributor to the peak remains the fuel and food price baskets. Inflation is expected to remain elevated, above the CBK’s upper target of 7.5% due to higher food and non-alcoholic beverages, housing, water, and fuel-related prices. The fund will seek to invest contributions and fund maturities in higher-yielding assets given the rise in interest rates going forward.