Official data shows that the amount held by commercial banks above the statutory 5.25 per cent requirement stood at Sh4.7 billion, the lowest since mid-February when it stood at Sh1.9 billion.
Excess cash reserves held by banks fell to a three-month low at the end of last week, indicating the money market is tightening following weeks of high liquidity.
Latest Central Bank of Kenya (CBK) data shows that the amount held by commercial banks above the statutory 5.25 per cent requirement stood at Sh4.7 billion, the lowest since mid-February when it stood at Sh1.9 billion.
In the intervening period, the excess reserves have averaged Sh9.8 billion, touching a high of Sh15.2 billion two weeks ago.
“Commercial bank excess reserves above 5.25 per cent averaging requirement declined to Sh4.7 billion, from the previous week’s Sh13.1 billion,” said CBK in its weekly bulletin.
This came as CBK actively mopped up liquidity, mainly through term auction deposit (TAD) and primary government security sales.
“During the week, there was a net liquidity withdrawal of Sh25.7 billion compared to a Sh12.4 billion injection the previous week. The net liquidity withdrawal was due to Treasury bond sales and term auction deposits amounting to Sh20 billion and Sh24 billion, respectively,” said Cytonn Investments in a report. There was net withdrawal of Sh19 billion in Treasury bill sales.
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