The Uganda Shilling steadied following a weakening streak that saw the unit test record levels. The shilling firmed, reflecting subdued demand that prevailed for most of the trading week.
Sentiment toward the local currency was largely driven by a mix domestic factors on one part and external events, in particular the uncertainty surrounding the outcome of US elections.
Trading remained in a narrow range of 3695/3705 during the week ending November 13, 2020.
Relatedly fresh restrictions to combat COVID 19 introduced across the major economies and a flush of new cases have spooked investors, limiting bets on riskier assets, but slowing enthusiasm for safe havens.
Regional currencies followed a similar trend, with the Kenya shilling in particular remaining unchanged on low dollar demand. The currency held at 108.95/15.
The outlier currency was the Zambian kwacha that was under tremendous pressure as news came out that Zambia was on the brink of default on its external bonds with investors remaining adamant on granting relief requests.
This event will make Zambia the first African sovereign to default on its debt and likely to send shock waves across the African Eurobond market.
“In the coming days, the shilling is seen on a firm footing, mainly underpinned by sagging demand as market players stay on the fence due to mid month tax payments,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.