The Uganda shilling nursed losses on the back of elevated demand as commercial banks were seen building positions during the week ending 7th February 2020.
The local unit opened the week stable but mid week the currency was in bearish territory trading at 3680/ 90 compared to opening levels of 3660/3670. In the shilling money market, overnight funds quoted at 6% while one week averaged 9%.
In the fixed income space, it was a dull week with little activity in the secondary market.
In the regional currency markets, the Kenya shilling was well balanced with demand and supply evenly matched. Remittances and portfolio flows remained the main source of supply. Trading was in the range of 100.30/50.
In the global markets, the US dollar held near a two week high mainly on upbeat US economic data that surpassed market expectations. The positive US private sector jobs report gave markets some respite from heightened concerns about the coronavirus, though uncertainty about the impact of the epidemic on the global economy looks set to keep most investors risk averse, at least in short run. Another factor that played in support of the greenback is the Trump acquittal in the middle of the week.
“Outlook for the local currency indicates that the unit will remain on the back foot, retreating as corporate dividend season sets in,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.