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Uganda Shilling Gains Some Stability After Hitting Two-Year Low

The Uganda shilling was volatile in the early part of the week ending 3rd November 2017, but later stabilized as corporate and interbank demand fizzled out. Trading was in the range of 3650/3660.

A week earlier, the Uganda shilling drifted in narrow range after hitting a near two year low as a result of the Central Bank intervention that was triggered by demand pressures.

In the fixed income market, Treasury bond yields continued to drop. The two year came out at 11.015%, while the 5 year traded at 12.70%. BoU accepted 180billion as targeted and the bond auction was oversubscribed.

In the regional currency markets, the Kenya Shilling recovered from previous losses in the aftermath of the polls. Inflows mainly from the horticulture rendered support for the shilling. Markets quoted the shilling at 103.65/85.

In the coming days, the Kenya Shilling was likely to come under renewed pressure as demand is expected to pick up mainly for interbank and importers.

In the international currency markets, the US dollar traded marginally lower amid a sense that Jerome Powell, the Fed Chair nominee was more dovish on monetary policy. In a similar manner, Wall Street that has been trading around a series of record highs all slipped in modest.

Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners says: “ Forecast for the [Uganda] Shilling indicate relative stability, with the market normalcy returning and anxiety dying down in Kenya markets. However, occasional pockets of demand could lead to marginal weakening.”

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