The Uganda shilling traded in a volatile mode amidst local and offshore selling during the week ending 13th July 2018.
Broadly the unit bounced back sharply to trade in the range of 3760/3770. However, liquidity in the money markets remained tight.
Overnight funds traded at 6% while one week funds traded at 9%.
In the fixed income market, Shs220billion was on offer for 3 and 10 year bonds. Yields went up to 16.500% and 17.250% respectively.
Both tenors were oversubscribed. BOU rejected speculative bids on the 10 year bond.
In the regional markets, the Kenya shilling held firm against the dollar backed up by sizable portfolio flows targeting the equity and bond markets. Trading was in the range of 100.65/85
In international currency markets, the US dollar erased it’s losses and ended higher against the majority of its peers as investors shrugged off news that US may impose more tariffs on Chinese imports. The greenback was also supported by the rising US Treasury yields, and the inflation data that reaffirmed expectations that the Federal Reserve will hike interest rates two more times this year.
“Outlook indicates some volatility play, with the shilling likely to build on the bullish momentum in dull trade as corporates stay out market on account mid month taxes,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.