The local currency traded marginally stronger in the week ending July17, 2020, pulling away from the key technical level of 3700, with both counters trading below that level as supply conditions improved, against subdued demand. Bid and ask quotes were at 3685/95.
With the prevailing minimal volatility, markets were anticipating the Central Bank presence in the market on the buy side for reserve rebuilding.
In fixed income segment, Treasury bill auction was well bid. 405 billion was tendered against an offer of 245 billion. Yields remained relatively flat, printing at 8.679%, 9.953% and 12.000% for 91, 182 and 364 days respectively.
In the regional currencies, the Kenya shilling was on the edge, undermined by an uptick in demand as movement restrictions were lifted including air travel with the international airport set to reopen in a couple of weeks. KES was quoted at 107.25/45. In Tanzania, the currency was steady, trading at 2310/20, supported by descent flows mainly from the minerals sector.
Offshore markets saw the US dollar holding on its gains against other currencies as worries that resurgence of Covid infections was starting to curb economic activity. This triggered safe haven flows into US market.
In Europe, the single currency was well supported by hopes of an additional fiscal stimulus while the sterling remained unchanged.
In commodities trading, oil prices were little with Brent down at 43.26 dollars per barrel while US Crude traded at 40.84 dollars per barrel.
“Forecast for the shilling indicates a stable stance in the coming week, pausing from the recent weakness, however the global sentiment will continue to influence the direction in the medium term,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.
