At this rate, a new note of a higher denomination must be introduced to prop up the Kes 1000 one because it’s value is being eroded daily. Amefanya kazi buana.
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Azor alai ,break it down fo wanjiku
Wenye walikimbia kununua bonds zile ziliadvertiziwa hapa za 13% for an 18 year bond wakuje watuambie. It wasn’t a smart buy to start with, and it’s looking even worse.
@Aka mpole inflation is happening worldwide, sio Kenya pekee.
This is good for low tier business people.
We might find favor in securing loans.
Give us options sir. Hypothetically speaking, What would you have done with 3 million bob in your current account? Concentrate mostly on Financial markets. Thanks.
You will pay more for the same loan.
I know but the banks are after profits.
Got orders to fulfil but there is no idle capital especially outside the banking realm.
Why are you limiting me to the financial markets? The last thing I want to be holding is cash or bonds during inflation. If I am a lender then great.
If I have too much cash and I must hold cash in the short term, then I’d rather try Safaricom Investment Cooperative’s Pepea FixedDeposit Account. At the moment, they will pay 11.5% for holding your 3m for 6 months. That’s about as long as I can hold Kenya Shillings that I have to hold.
No 18 year Kenya Government KES-denom bond at 13% for me. Forget it.
why? Nataka kutupa kitu huko sahii
Why is it not a smart buy?
If CBK raises interest rates, the value of existing bonds fall.
Google interest rate risk for a more in depth explanation.
I have no faith in the Kenya Government or the Kenya Shilling especially not for 18 years.
Other than covid period, Kenya hasn’t defaulted on paying bonds. And that was a unforeseen event which they postponed payment for 6 months.
Stop misleading people when it is obvious you are not able to explain what you are saying!
The ktalk sage ,the one and only brownskin @Azor Ahai come and interpret for mkamba mjinga
expert wakuje waambie sisi kama tumwage millions kwa bonds
How may I be of further help? Bonds have an inverse relationship with interest rates.
We had this same discussion where I gave the formula (FV = PV × (1 + i)^n ) that showed how interest rates can fuck a bond holder.
Interest Rate Risk - Definition, How to Mitigate the Risk
First click the linkabove to understand what the interest rate risk is.
Then realize that when there’s inflation like we have today, CBK reacts by raising interest rates to bring that inflation down.
They did :oops::oops::oops:??!!!
Like I said, everyone has their own investment strategy and they are free to follow it.
I have clicked and read. But it seems you just misunderstood what they are saying. What they are talking about is with regard to demand and selling of already existing bonds (secondary market). They are not talking about absolute value of the bonds:
‘‘The inverse relationship between the interest rate and bond prices can be explained by opportunity risk. By purchasing bonds, an investor assumes that if the interest rate increases, he or she will give up the opportunity of purchasing the bonds with more attractive returns. Whenever the interest rate increases, the demand for existing bonds with lower returns declines as new investment opportunities arise (e.g., new bonds with higher return rates are issued).’’