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Update: Shilling Remains Weaker

The Uganda shilling was firm against the dollar amid low  market demand for forex during week ending 11th May 2018.

Trading was in the range of 3710/3720. In the money markets overnight and one week rates held at the previous week’s level of 5% and 9% respectively.

In the fixed income segment, BOU held a Treasury bill auction. 175 billion was on offer. Yields remained relatively flat, with 91 days trading at 8.470%, 182 day at9.193% and 364 day at 9.864%.

Overall the auction was oversubscribed.

In the regional currency markets, the Kenya shilling held steady with portfolio flows providing sufficient supply to meet the demand from energy and manufacturing sectors. Trading was in the range of 100.55/65.

In international currency markets, the US dollar hovered below a 4.5 month high against the major currencies as investors trimmed their expectations for federal rate hikes after inflation data showed that US price pressures remained weak. The Fed has already raised rates once this year and is widely expected to go two more times in 2018.

“Outlook for the shilling indicates a stable unit, as demand remains muted. Mid month corporate tax payments are expected to limit market activity,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.

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