The shilling held steady on the back of strong dollar inflows from charities and commodities exporters against very low demand pressures in the market during the week ending December 7, 2018. Trading was in the range of 3730/40.
In other economic news, the Central Bank kept the policy rate unchanged (at 10%) after assessing the risks surrounding the inflation and growth outlook.
In the fixed income space, a Treasury bill auction with 195 billion on offer was conducted. There was a marginal drop in yields printing at 10.386%, 11.659% and 12.749%. The auction was oversubscribed across all maturities.
In the regional currency markets, the Kenya shilling was stable supported by tight liquidity in the money market and inflows from the Diaspora. Trading was in the range of 102.55/75.
In the international currency markets, the US dollar struggled, hobbled by fresh speculation that a widely expected rate hike later this month could be the last before the Federal Reserve hits a pause on its tightening cycle.
On the other hand, investors remained nervous following the sharp fall in US treasury yields with an inversion of the yield curve signaling a sharp economic slowdown in the coming months.
“Forecast for the [Uganda] shilling in the coming week indicates slight weakening as major market players cover short positions and close their books ahead of year end,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.
