The Uganda shilling was relatively stable following the Central Bank slight reduction of the policy rate from 10% to 9.5% during the week ending 6th October 2017.
Market demand and supply dynamics were at par, with some players seen building positions ahead of a short trading week of independence holiday. Trading was in the range of 3597/3607.
In the interbank money market, rates held at the previous week’s level with overnight funds trading at 8% while 1 week funds traded at 9%.
In the fixed income market, 180 billion was on offer for 3 year and 10 year reopening. Coupons were at 13.250% and 16.000% while yields came out at 11.965% and14.542% respectively. Both tenors were oversubscribed.
In the regional currency markets, the Kenya Shilling was firm supported by substantial portfolio flows and tightening of liquidity by the Central Bank. Trading was in the range of 103.25/45.
In the international currency markets, the dollar was wobbly over the choice of the new Fed Chairman following interviews that were held.
Markets were cautious that the preferred candidate was less hawkish and that would hurt the dollar going forward.
“Forecast for the [Uganda] Shilling indicate stability, with some pockets of demand emerging, but not significant to change the trend,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.
