The Uganda shilling was on the back foot against the dollar, trading above the 3700 key level on both buy and sell side, pressured by low fx supply amidst an uptick in demand mainly from commercial banks, manufacturing and energy sectors.
During the week ending April 27, 2018, trading was in the range of 3705-3715.
In the money markets, overnight funds traded at 7% while one week held at the previous week’s level of 9%.
In the fixed income space, a 175 billion Treasury bill auction was held. Yields broadly remained flat to trade at 8.445%, 9.099% and 9.772% for 91, 182 and 364 days. The auction was oversubscribed.
In the regional markets, the Kenya shilling weakened, undermined by demand from commodities importers purchasing fx for their end month requirements. Trading was in the range of 100.20/30.
In the global markets, Asian shares edged higher after US equities were buoyed by strong quarterly earnings while the euro plunged to a 3 month low after the Central Bank kept rates unchanged. The USD remained bullish as higher US yields prompted markets to unwind dollar positions.
“In the coming week, the shilling is likely to remain under pressure on account of elevated demand and could weaken slightly on the back of weaker fx flows that have already been priced in,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.