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Currency Trends: Uganda Shilling Loses Its Gains Against Dollar

The Uganda shilling shed its gains against the US dollar as demand picked up mainly from commercial banks building positions and a bit of import demand during the week ending 12th May 2017.

Bank of Uganda (BoU) was in the market propping up the currency through repo operations. Trading was in the range of 3630/40.

In fixed income market, the Central Bank offered 180 billion in treasury bills. Yields marginally increased on the 91 and 364 day to 10.247% and 13.903% while 182 day dropped to 11.500%.

The increase in the size of the offer can be interpreted to mean that government borrowing requirements are increasing as the fiscal year comes to an end.

In international currency markets, the US dollar slipped as risk appetite faded and markets remained on the edge, with concerns on whether the latest crisis, sacking of the FBI Boss by President Trump, could impede the implementation of the long awaited economic plan.

The British sterling hit a three week high as markets seemed to be comfortable with political approach on Brexit.

In commodities, oil prices held firm at $50.46 on account of a fall in US inventories and Saudi Arabia cut in supplies.

Stephen Kaboyo, a markets analyst and Managing Director at Alpha Capital Partners, says: “ In the coming weeks, the shilling forecast indicate mild weakening and likely to trade just below the key level of 3650 as demand continue to increase.”

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