The Uganda Shilling slid mid week and remained weak, retreating to a weekly low to trade slightly above the key level of 3700. USD/UGX pair was to a large extent sentiment driven as traders took positions in anticipation of stepped up demand ahead of opening up of the country’s borders and international air travel.
In the fixed income market, the yields remained generally flat with investors remaining bullish, maintaining the view that Uganda’s fixed income assets continue to offer the best risk adjusted opportunities, which explain the significant increase in the exposure to the assets, despite the flatness of the curve.
Yields printed at 7.748%,9.474% and 12.050 for 91, 182 and 364 day respectively.
In regional markets, the Kenya shilling was on the ropes as market demand started building up ahead of month end. The currency traded in range of 108.40/60.
The global markets witnessed a strong greenback, holding on its gains against most currencies as signs of economic slowdown in Europe and US revived concerns about the second wave of COVID infections. The US currency is expected to continue on the rise, maintaining its safe haven appeal as another spike of the pandemic looms. Other major currencies were held down by increased worries of likely return to severe lockdown restrictions in the major world cities.
“Outlook suggests that the local currency is likely to be well supported primarily by end month charities and commodity flows that will have a supply impact. On other factors, the local focus will also be on the domestic CPI data expected to be real eased in the coming week,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.
