The local currency was stable at opening session of the week but slightly weakened mid week on the back of uptick in demand mainly from the manufacturing sector and retail business. The shilling later recovered and the market pared gains with bid and ask at 3665/3675.
In the fixed income, the government treasuries were a touch weaker with yields dropping compared to the previous auction. Yields printed at 8.227%,9.780% and 12.101% from 91,182 and 364 day tenors . So far this year, demand for Uganda government treasuries has largely been supported by elevated yields on offer compared to other peer markets.
In the regional currencies, it was mixed play with Kenya shilling on the defensive owing to robust demand on the back of limited inflows to trade at 108.15/35, while the Tanzania shilling was stable, expected to slightly strengthen on anticipated inflows, mainly from agricultural sector. Trading was in range of 2315/2325.
In the global markets, the US dollar gained on choppy trade after the Federal Reserve announced that it would roll out an aggressive average inflation targeting strategy to boost employment and allow inflation to run faster for longer periods than in the past. Under the new approach, the Fed will seek to achieve inflation averaging of 2% overtime, offsetting periods when it is running below that , with periods when it is higher.
Euphoria after the announcement proved brief as most emerging markets reversed their rallies.
“Going forward, with no significant shift in the local market dynamics, the shilling is expected to trade in its firmly established price range,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partner.
