The Uganda Shilling traded in a weak territory during the week ending 6th April 2018 undermined by a spillover of demand from the previous week.
The market opened short, driving the Shilling through the key level of 3700 on the sell side. Later in the week, the depreciation pressure cooled off and the trading was just below the 3700 mark.
In the interbank money market, overnight funds traded at 5.00% while one week funds traded at 9.00%.
In the government securities market, there was no primary auction; a few deals were reported in the secondary market.
In the regional markets, the Kenya shilling was on a front foot on account of increased local currency borrowing by commercial banks to meet cycle targets. Trading was in the range of 100.80/101.00
In the international currency markets, the US dollar dipped against the major currencies after the US President indicated that he was considering $100 billion additional tariffs on China. The simmering US- China trade dispute has stirred concerns about its impact on global trade and economic growth and financial markets will remain sensitive to any fresh developments.
“In the week ahead, the shilling is likely to remain a bit volatile, with moderate weakening, undermined by demand from all fronts including repatriation of dividends in this the last quarter of the fiscal year. In addition, the policy signal expected from the Central Bank will keep the markets on the edge,” Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners says.