The Uganda shilling was on a losing streak for most of the trading sessions during the week ending 29th March 2018. This was due to an upsurge in demand from the interbank and major corporates buying dollars to meet their end month requirements ahead of the long Easter weekend.
On the supply side, some flows trickled in mainly from NGO’s end month conversions. Trading was in the range of 3680/3690. In the interbank money market, overnight funds traded at 7% while one week funds traded at 8%.
In the fixed income space, BOU held a Treasury bill auction with 160 billion on offer. Yields edged up marginally to trade at 8.491%, 8.869% and 9.578% for 91, 182 and 364 day respectively.
In other economic news, Inflation continued to ease touching 2%, a trend that will continue to bias policy towards further easing, creating optimism that low rates could spur consumption spending and drive momentum for economic recovery.
In the regional markets, the Kenya Shilling weakened slightly as market players were squaring off positions. Trading was in the range 100.80/101.00.
In the International markets, the US dollar spiked higher against the major currencies on improved sentiment as markets downgraded the fears of a trade war between the US and China.
“Going forward, the shilling is likely to remain vulnerable as short term demand remain elevated going into the last quarter of the fiscal year, and more importantly as corporates enter the dividend payment season,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.
