The Uganda Shilling held firm in a short trading week with markets expecting a knee jerk reaction following Bank of Uganda (BoU)’s rate cut that was likely to stimulate demand for forex.
On Wednesday, BoU cut its benchmark rate by from 11.5% to 11%, citing dismal growth in the first two quarters of the fiscal year that gave a bleaker view of the economy. Trading was in the range of 3600/3610. In the money market, overnight rates averaged 10% while 1 week was 12%.
In fixed income market, yields dropped across all tenors, trading at 10.112%, 11.656% and 13.809% for 91,182 and 364 day treasury bills.
In international currency markets, the dollar lost ground against major currencies following US President Trump remarks to Wall Street Journal that the US dollar has kept a bullish tone and is too strong and that his preference would be to keep interest rates low in the US.
According to Stephen Kaboyo, a markets analyst and Managing Director Alpha Capital Partners, “Outlook point to mild weakening of the shilling as pockets of demand are expected to emerge as markets open after a long Easter weekend.”