The Uganda shilling nursed losses on banks/ corporate driven demand, as risk aversion was the dominant theme in currency markets.
During the week ending 13th
March 2020, the local unit consistently traded above 3700 key level on both sides
of the market, with strong indication that the market was likely to test a new
resistance level.
In the fixed income, a Treasury bill auction with 225 billion offer was held.
Yields remained generally flat at 9.575%, 10.952% and 12.752% for 91, 182 and
364 day tenors. There was strong appetite at the long end of the market that
resulted in BOU scooping 240 billion in total over the 175 billion that was
announced for the 364 day.
In the regional currency markets, the Kenya shilling held its ground, supported
by NGO flows and portfolio investors participating in fixed income market.
Trading was in the range of 102.40/68.
In the global markets, the US dollar recovered from the Trump announcement
effect that banned travel from Europe. The depth and liquidity of the US market
kept investors on the scramble for the US currency.
In other segments of the market, the Dow plunged 10%,the largest point drop
since the Black Monday in 1987. While in commodities, oil prices saw their
worst weekly drubbing since the 2008 financial crisis as coronavirus continued
to knock demand. Brent crude traded at $33.08 per barrel.
“In the coming weeks, the shilling is likely to remain bearish as the
disruption of the global supply chains prevail with the dollar safe haven status
holding effectively leading traders to continue their stampede out of low
yielding currencies,” says Stephen Kaboyo, an analyst and Managing Director at
Alpha Capital Partners.
