After months of stability, the Uganda Shilling continues to lose ground. During the week ending 20th October 2017, trading was in the range of 3645/3655.
In the early part of the week, the Shilling was under immense pressure on account of strong demand from the interbank ,as commercial banks rushed to cover their short positions.
Significant demand was also seen from the energy, manufacturing and importers. The Shilling weakening further means that prices of goods in Uganda are likely to shoot up, a thing that may also lead to an increase in the country’s inflation.
However, at the close of the week, the Shilling registered a modest rebound from its earlier losses as demand receded.
In the regional markets, the Kenya shilling was under pressure due to concerns about the credibility of the repeat presidential election. The anxiety kept the markets on the edge. The Central Bank intervened and sold dollars in order to calm the markets. Trading was in the range of 103.45/50.
In the international currency markets, the dollar trimmed its losses following the release of better than expected US data contained in Philadelphia manufacturing index report that highlighted continued strength in the US economy.
At Wall street, it was a landmark week as the Dow Jones index hit an all time high and touched the 23000 level, amidst remembrance of the Black Monday, 20years ago when the market plunged by 20% . The huge momentum seen this week was largely driven by bank and tech stocks.
“Forecast for the Shilling indicate volatility as pockets of demand continue to play out coupled with an undercurrent of negative sentiment on account of domestic and regional political developments,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.