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BoU Intervention Helps Keep Shilling Stable

It was range bound trading for the local currency. At the opening bell, UGX was stable, but ceded some ground mid week as pockets of demand emerged mainly from corporate players. Trading was in the range of 3780/3790 during the week ending April24, 2020.


Towards the end of the trading week, BOU conducted open market operations through a deposit auction and a repo of significant amounts as part of their liquidity management program. This action also supported the currency and kept volatility in the money markets in check.

The fixed income segment had a Treasury bill auction with 225 billion on offer. There was huge up take with total bids in excess of 439billion. Yield remained relatively steady to print at 9.575% , 11.938% and 12.999% for 91, 182 and 364 day tenors.

In the regional currency markets, the Kenya shilling held steady on anticipation of disbursement’s from multi lateral agencies to support the country’ s economic response to Covid 19. The currency traded in a narrow range of 106.95/107.00.

Global markets saw the greenback ease, giving up its long held tall stance as the Euro and Sterling remained well anchored amid a bounce back in crude oil prices that gave succour to the markets shaken by pandemic induced drop in demand.

In commodity markets, there was upheaval with oil trading in unchartered territory as the extreme drop in demand combined with inadequate filling storage sent prices plunging into negative for the first time in history. WTI crude traded at minus 37.63 dollars per barrel but later bounced back to trade at 20 dollars .
Gold was in a bull market benefitting from widespread stimulus from major Central Banks across the globe. The bullion had earlier dipped on volatility in the oil markets.

“Outlook indicates a stable shilling supported by end month flows, from charities and trickle in from portfolio flows. On the overall both supply and demand side dynamics will not be significant to change the prevailing price trend line,” Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners says.

He adds: “Another notable news that created positive sentiment in the markets, was the announcement by Total on the acquisition of Tullow assets, seen as a major breakthrough in reviving the fortunes of Uganda’s oil industry.”

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