Monthly Market Commentary – August 2026

August 2026 market overview. Inflation, liquidity, government securities and equities all shaped the month, while global markets broadly advanced amid shifting energy prices and geopolitical uncertainty.

Month’s highlights

• Kenya’s annual inflation increased to 6.59% from 6.49% in July, driven mainly by food, transport and electricity prices.
• The Monetary Policy Committee maintained the Central Bank Rate at 8.75% while assessing inflation expectations and the effects of the Middle East conflict on the growth outlook.
• NSSF and PSSF collectively invested KShs 24.19 billion in the KShs 44.7 billion Talanta Bond, which recorded 100.2% overall subscription.
• The Central Bank accepted KShs 22.51 billion in a bond switch auction against a KShs 15 billion target, helping extend the government’s debt maturity profile.
• NSE-listed companies continued to prioritise shareholder returns, with several firms maintaining or increasing dividend payouts during a strong year-to-date market rally.
• China’s annual inflation increased to 0.8%, while Eurozone inflation rose to 3.3% amid higher energy prices.
• The S&P Global US Composite PMI reached 56, signalling the strongest private-sector expansion in 52 months.

Economic indicators

Foreign exchange reserves

Usable foreign exchange reserves decreased by 3.03% to USD 14.93 billion, equivalent to 6.2 months of import cover. This remained above both the Central Bank of Kenya’s statutory four-month benchmark and the EAC convergence criterion of 4.5 months.

Currency

The Kenyan Shilling depreciated by 0.04% against the US Dollar, 0.80% against the Sterling Pound and 0.97% against the Euro. It closed the month at KShs 129.45, KShs 175.40 and KShs 150.35 respectively.

Inflation and liquidity

Annual inflation rose to 6.59%. Money-market liquidity increased marginally as government payments offset tax remittances. KESONIA remained unchanged at 8.75%, average interbank volume rose by 148.70% to KShs 17.07 billion and commercial banks’ excess reserves increased to KShs 25.50 billion.

Fixed income

Treasury bills

T-bills recorded an overall subscription rate of 177.81%, up from 143.23% in July. Subscription for the 91-day, 182-day and 364-day papers stood at 291.25%, 161.52% and 103.34% respectively. Yields on the 91-day and 182-day papers declined, while the 364-day yield increased slightly.

Treasury bonds

T-bond turnover reached KShs 7.66 billion across 330 deals, representing increases of 36.20% in turnover and 97.60% in deal count. In the primary market, the CBK reopened four bonds to raise KShs 165 billion. Kenya’s Eurobond yields declined by an average of 22 basis points.

Equities

Market capitalisation increased by 5.66% to KShs 4.22 trillion. NASI, NSE 20, NSE 25 and NSE 10 gained 5.66%, 5.67%, 5.92% and 6.73% respectively, while the Banking Sector Index rose 6.06%. Large-cap gains were led by KCB, ABSA, Safaricom and EABL.

Alternative investments

• Derivatives turnover declined to KShs 72.27 million, with a trading volume of 14,605.
• The I-REIT market recorded no activity during the month.
• ETF turnover declined to KShs 60.53 million across 1,032 deals.

Global and regional markets

This commentary is provided for general information only and should not be treated as advice on specific circumstances. View the original publication below for the complete analysis, charts and disclaimer.