Financial markets

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The principal objective of Open Market Operations (OMO) is to maintain optimal liquidity in the domestic market guided by the prescribed monetary policy stance. Ringgit usd exchange rate The Central Bank of Kenya implements OMO through two main instruments, namely Repurchase Agreements (Repo and Reverse Repo) and Term Auction Deposit (TAD).

Repurchase Agreements (Repo) are conducted whenever the CBK is mopping up liquidity from the domestic market to achieve the desired level of liquidity. Stock market meanings The Repo transactions will involve sale of Government securities to the counterparty lending funds to the Central Bank.


Reverse Repo is for injecting liquidity into the Banking system in line with the deviations or shortfall of set monetary targets or as approved by the Monetary Policy Management Committee. Kurs usd ke rupiah Reverse Repo transactions involve purchase of Government securities by the Central Bank from commercial banks. Exchange rate us to canadian dollar Haircuts are however applied on securities to guard against any risks arising out of market and price movements.

The country currently pursues a free-floating exchange rate system. Samsung washing machine codes This implies that there is no predetermined rate at which the shilling exchanges with other currencies. Convert indonesian rupiah to usd Like the prices of other goods and services that are decontrolled, the forces of supply and demand determine the value of the shilling. Binary tools The Central Bank may only step in to even out extreme and undesirable fluctuations in the shilling’s trading rate. Futures market cnn Such volatilities may occur due to speculative activities in the market or when the market is not able to clear seasonal upsurges on either demand or supply.

The Central Bank of Kenya compiles indicative foreign exchange rates daily for use by the general public. Msn news usa These rates reflect the average buying and selling rates of the major participants in the foreign exchange market at the open of trade every day, thus providing a good indicator for any interested party on the value of the shilling on any particular day.

It is noteworthy that the rates provided by the central bank are only indicative and that forex dealers, i.e. Nzd usd live chart commercial banks and forex bureaus, may apply varying rates on their forex transactions. Dollar exchange rate in india It is expected that competition among the dealers will lead to reasonable/competitive margins being applied to forex transactions with customers.

Forex bureaus are licensed to cater specifically for the retail end of the forex market, meaning buyers and sellers of small amounts of forex, mainly in cash. Usatoday com news Bureaus therefore often have favourable rates for this market segment when compared to commercial banks’ cash rates.

The commercial banks are more competitive when dealing with larger amounts of forex that are settled via telegraphic transfers using correspondent accounts abroad, and therefore tend provide finer rates for this market segment. Trading places stock market scene Nevertheless, all forex deals are transacted on a willing buyer willing seller basis and are subject to negotiation between the forex dealers and their customers.

The 91 Day, 182 Day and 364 Day Treasury Bills are debt obligations issued by the Central Bank of Kenya, on behalf of the Kenya Government, for 3, 6 or 12 months at either a discount or face value, at a competitive auction on a weekly basis. Convert aud to usd At a discount means the instrument is sold to an investor at below the face value and then redeemed at maturity at the full face value. Inc connector The difference between the discounted price and the face value determines the yield/interest earned. Usd news The yield on 91-day, 182-day and 364-day Treasury bills are the average 91-day, 182-day and 364-day discount rates.

Lenders use these average rates to adjust interest rates on loans and corporate bonds as economic conditions change. Binary dictionary They then add a certain number of percentage points, called a margin, which doesn’t vary, to it to establish the interest rate you must pay or will earn in the case of a corporate bond. Us stock market futures contract When the rate goes up, interest rates on any loans or corporate bonds tied to it also go up.

Treasury bills are not listed securities and thus the trading volume has been very low mainly due to the tedious manual process involved. Funny quotes about life lessons To address this situation and create vibrancy in this market segment, the Bank embarked on an automation process for trading bills on a Deliver Versus Payment (DvP) model using the Over the Counter (OTC) platform.

The term ‘yield’ in the context of debt markets refers to the annualised percentage increase in the value of a debt instrument. Exchange rate mxn usd The percentage depends on the time of the instrument remaining to maturity such that for a bond t years to maturity, yield is represented as Y(t). Dollar yen exchange rate For instance, a bond whose value increases by 10% p.a. Market futures quotes is said to have a 10% yield.

A yield curve is a relationship between the interest rate and the time to maturity of the debt instrument denominated in a given currency. Binary to hex For the issuer, an interest rate is the cost of borrowing, while for the investor the rate represents a measure of return from investment.

The Kenya Government securities yield curve is derived from the relation between interest rates of Treasury bills/bonds and the time to maturities of bonds of different tenors. Fraction to whole number calculator The interest rates for Treasury bills are the prevailing weighted average rates for 91-day, 182-day and 364-day papers, while interest rates for Treasury bonds are the average prevailing secondary market yields for bonds based on years to maturity. Kroner to usd In a developing market, the estimation of the yield curve entails use of only a few known yields for certain maturities while yields for other maturities are estimated by interpolation.

For the investor, a yield curve is useful for understanding conditions in the financial markets with an aim to seeking trading opportunities, measuring expected returns on bonds and acting as an indicator for interest rates and inflation expectations. Love quotes tagalog For issuers, the yield curve acts as a benchmark for pricing other financial instruments in the market as well as predicting the yield/prices of future government issuances.

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