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Uganda Shilling Gains Slightly, Kenya’s Hits Strongest Level In Six Months

The Uganda Shilling was on the front foot buoyed by subdued demand against fairly large flows from commodity exporters, trading in the range of 3665/3675 during the week ending 8th February 2019.

This is about 10/= shillings stronger compared with opening session at the start of the trading week.

In other economic news, the Central Bank kept the policy rate intact (at 10%), citing anticipated elevated inflationary pressures and risks emanating from the global financial markets

In the fixed income space, there was no primary auction. Activity was seen in the secondary market.

In the regional markets, the Kenya shilling strengthened hitting its strongest level in six month, backed up by portfolio and horticulture flows in a market characterized by thin demand. Trading was in the range of 100.50/25.

In the global markets, emerging market currencies fell as the dollar held on its gains aided by strong economic data while stock indexes in the developing markets slipped with the Chinese markets remained closed for lunar New Year. Despite the dovish tone from US Federal Reserve, the greenback has stayed resilient.

“Outlook indicates a bullish [Uganda] shilling amidst anticipated thin demand. Other factors that will play in support are the expected renewed interest of portfolio investors in the local debt market and the mid month tax payments that will reduce the dollar demand,” Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners says.

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