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MPC in Kenya HIKES CBK Rate BY 400BP to 11%
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Mainat
#71 Posted : Saturday, October 08, 2011 10:38:07 PM
Rank: Veteran

Joined: 11/21/2006
Posts: 1,590
Intelligentsia wrote:
Mainat wrote:
Weakening $/Ksh rate-this is being driven by widening -ve Balance of Payments gap as we are importing lots more and exporting not as much and hot money. Both can not be changed by CBR.
Our investment banks are only that in name only. Wengi wao wanatafuta kazi ya journalism.


Surely availability and affordability of bank import financing (rem. rates and availability influenced by CBR) would boost purchase of imports? d'oh!

Kweli si kizungu we took the wrong container.

All economic questions can be answered by understanding the relationship between demand and supply.
Fx rate is weak fundamentally because we are importing more (higher demand for $s)
Sehemu ndio nyumba
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'user'
#72 Posted : Tuesday, October 11, 2011 5:07:07 PM
Rank: Veteran

Joined: 12/3/2010
Posts: 1,141
Location: Londokwe
'user' wrote:
Gordon Gekko wrote:
'user' wrote:
5. an inflow of foreign capital for buying bonds;
6. an upward pressure on exchange rate;


Kindly explain these two points. If there is more forex flowing into the country, chasing the same amount of kenya shillings, it follows that the exchange rate will STRENGTHEN, unless we print moolah.


It's a gamble which as Mainat has said may work or not work.

The problem is that foreign investors are seeing stars at home.That's why they have been exiting emerging markets.so there may not be much dollars to come in .
Even then why kill the domestic economy(industries) by increasing interest rates just to sell government bonds(more public debt).These will not add much value in the longrun as it will lead to the dreaded crowding out effect meaning No credit for private investors .




back to the drawing board , this increase will only make life harder.

Ndungu should raise up his hands and say 'nimeshindwa'.

Time to say no to imported substandard goods , toys, mitumbas , cars etc
2012 is here.Kenya is Ours.Be Part of The Peace Keeping Mission To Protect Our Motherland.Say No To Violence and Tribal Hatred .If you can read this,wewe ni mtu amesoma, usifikirie kama mtu hajaenda shule .Ni Hayo Tu
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  | | Edit by user: Tuesday, October 11, 2011 5:08 PM | Reason: Not specified
Obi 1 Kanobi
#73 Posted : Tuesday, October 11, 2011 5:39:15 PM
Rank: Elder

Joined: 7/23/2008
Posts: 3,017
I am indeed impressed with the depth of knowledge coming through these thread.

Can someone explain the parallels if any between the Kenyan and SA economies, I noticed (on NTV nine oclock biz news) that our currency has not lost any significant ground against the rand, does this mean the rand is equally under siege.

Are there any lessons that the poor Prof. Gov can pick on.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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hisah
#74 Posted : Tuesday, October 11, 2011 5:48:44 PM
Rank: Chief

Joined: 8/4/2010
Posts: 8,977
@obi - http://www.moneyweb.co.z...53739&sn=2009+Detail
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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guru267
#75 Posted : Tuesday, October 11, 2011 6:06:56 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
Obi 1 Kanobi wrote:
I am indeed impressed with the depth of knowledge coming through these thread.

Can someone explain the parallels if any between the Kenyan and SA economies, I noticed (on NTV nine oclock biz news) that our currency has not lost any significant ground against the rand, does this mean the rand is equally under siege.

Are there any lessons that the poor Prof. Gov can pick on.


This was exactly my point.

The power of correlation has trapped all global currencies to be under the euro.. If the Euro is up against the dollar then the KSHS, AUD, ZAR are also all up inevitably and vice versa..

Since August the euro has lost 8% against USD and hence the blood bath has ensued,in the KSHS, AUD, ZAR..

The power of correlation is one thing govenors cant control.. That is why you are not seeing jumpy movement with bank rates from other central bankers around the world despite the collapse of currencies and rising inflation..

Ndung'u has no control over the fate of the shilling.. All he can do now is shower the good Lord with prayers to spare kenya from whats coming and stop with the irrelevant drastic moves..

Mark 12:29
Deuteronomy 4:16
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Obi 1 Kanobi
#76 Posted : Tuesday, October 11, 2011 7:04:12 PM
Rank: Elder

Joined: 7/23/2008
Posts: 3,017
guru267 wrote:
Obi 1 Kanobi wrote:
I am indeed impressed with the depth of knowledge coming through these thread.

Can someone explain the parallels if any between the Kenyan and SA economies, I noticed (on NTV nine oclock biz news) that our currency has not lost any significant ground against the rand, does this mean the rand is equally under siege.

Are there any lessons that the poor Prof. Gov can pick on.


This was exactly my point.

The power of correlation has trapped all global currencies to be under the euro.. If the Euro is up against the dollar then the KSHS, AUD, ZAR are also all up inevitably and vice versa..

Since August the euro has lost 8% against USD and hence the blood bath has ensued,in the KSHS, AUD, ZAR..

The power of correlation is one thing govenors cant control.. That is why you are not seeing jumpy movement with bank rates from other central bankers around the world despite the collapse of currencies and rising inflation..

Ndung'u has no control over the fate of the shilling.. All he can do now is shower the good Lord with prayers to spare kenya from whats coming and stop with the irrelevant drastic moves..



@Guru,

How then do we explain the shilling losing soo much value to the Euro and the pound.

I also thought our currency was generally pegged to the usd, so what I expected in a market where the usd is gaining strength was that the currency would hold its value against all other currencies, the same way it has held against the rand.

So my question remains unanswered, why are we holding ground against the rand. By the way our movement is also generally correlated to the Ug shilling but we seem to be losing to the Tsh. Understanding this behaviour should help us resolve the Shillings dillema or atleast sleep easier knowing there is really nothing we can do.

On another note, how is the construction boom impacting on our balance of payments, has anybody noticed how much imported stuff goes into construction of apartments, especially the finishing. And you have not even started to consider the furniture that the wives insist on having in the same.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Gordon Gekko
#77 Posted : Tuesday, October 11, 2011 7:51:30 PM
Rank: Elder

Joined: 5/27/2008
Posts: 3,760
True @obi I would have expected the ksh to crash against the rand as 1. Gold prices are at a lifetime high and 2. The hitherto uneconomical mines in SA can now turn a profit hence more production making the rand a safe haven unless my econ at 'THE' holds that ZAR is not backed by gold.
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the deal
#78 Posted : Tuesday, October 11, 2011 8:27:50 PM
Rank: Elder

Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
People do research before positing...start from what has been the lowest exchange rate between the ZAR and KES in the past 5 yrs? Then google risk aversion...domino effect..and then the SA economy and on why the SARB spent Billions to weaken the Rand earlier this year.
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guru267
#79 Posted : Tuesday, October 11, 2011 8:38:13 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
@Ob1 the currency peg against the USD spells double trouble for kenya coupled with strong positive correlation between global currencies and the euro..

To say the shilling is pegged to the dollar means that the Euro/ksh, pound/kshs rates are determined by a positive/ direct relationship of USD/Kshs..

So if the dollar strengthens against the shilling then the euro and pound follow suit and also strengthen. This happens regardless of euro/dollar or pound/dollar
Mark 12:29
Deuteronomy 4:16
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KulaRaha
#80 Posted : Tuesday, October 11, 2011 8:56:05 PM
Rank: Elder

Joined: 7/26/2007
Posts: 6,514
Cde Monomotapa wrote:
Cde Monomotapa wrote:
I think Prof. Ndung'u should rely on his legal security of tenure & go ahead with direct selling to oil importers and see how that pans out. Screw politicizing Kenyan livelihoods!!

Combo it with that IMF BoP support for extra ammo incase the banksters try to pull a fast one.


IMF support is $500m. Monthly shortfall is $600m.. How will it help?
Business opportunities are like buses,there's always another one coming
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