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Surprise Demand For Dollars Weaken Uganda Shilling Further

The Uganda shilling inched down undercut by a pickup in demand from local and offshore players during the week ending August 17, 2018.

The volatile urgency touched fresh lows to trade at 3765/3775. In the interbank money markets overnight and one week funds held at the previous week’s level of 6% and 9% respectively.

In the fixed income market, BOU offered Shs 170 billion for the treasury bill auction. The yield on the 91 day slightly dipped by 10 basis points to trade  at 10.25%, 182 day remained flat at 11.65%, while 364 day, edged down by 20 basis points and came out at 14.30% . The auction was oversubscribed and the target was achieved.

In the regional currency markets, the Kenya shilling held firm amid tight liquidity conditions and very little market activity. Trading was in the range of 100.70/90.

In the international markets, the US dollar slightly stepped back from its 13 month high against the major world currencies as the expected talks between China and the US offered hope that the two largest economies will find a way to avert a full blown trade war.

“Outlook indicates that the [Uganda] shilling could remain under pressure, trading on the back foot as the dollar strength and risk averse investors pull out of emerging markets assets coupled with expected rebound in the local demand,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.

Taddewo William Senyonyi
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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