NAIROBI: The yields on Kenya's Treasury bills are expected to rise further, pushed by rising overnight interbank lending rates and the central bank's term auction deposits.
The central bank has capped the weighted average yield on its 14-day, 21-day and 28-day term auction deposits - used to manage liquidity in the money markets - at 14 percent.
Due to tight shilling liquidity, the average interbank lending rate shot up to 16.3769 percent on Thursday from 12.7576 percent last Thursday.
"I think the rates are going to continue going up for a while. If you look at where the term auction deposits rate is at, and overnight is, the rates are bound to go up," a fixed income trader at one securities brokerage company said. Next week the central bank will auction 91-day, 182-day and 364-day Treasury bills worth a total 11 billion shillings ($109 million).
At this week's sale, the weighted average yield on the 182-day Treasury bill rose to 12.431 percent from 12.153 percent last week, while that on the 364-day bill jumped to 13.034 percent from 12.532 percent last week. The yield on the 91-day bill rose to 11.486 percent from 11.327 percent last week.
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