The Uganda shilling held its ground and remained stable as end month flows provided support amid subdued demand during the week ending 2nd of March 2018.
Trading was in the range of 3640/50. In the interbank money market overnight and one week held at previous week’s rates of 7% and 8.5% respectively.
In other economic news, the headline inflation for the month of February dropped to 2.1% from 3.0% in January, while Core dropped to 1.7% from on account of low food prices.
In fixed income space, the primary market yields mildly edged by a few basis points across all tenors to trade at 8.407%, 8.738% and 9.434% for 91, 182 and 364 days respectively. BOU accepted the targeted amount of 160 billion and the auction was oversubscribed.
In the regional markets, the Kenya shilling was stable supported by horticultural flows and remittances against low import demand. Trading was in the range of 101.30/40.
In international markets, the US dollar fell to a two week low on fears of an imminent trade war after President Trump announced that the US would impose tariffs on steel and aluminum. Early in the week the dollar was in a consolidation mode following the Federal Reserve Chairman’s comments that he will prevent the economy from overheating while sticking with the plan to gradually raise interest rates.
“Outlook for the shilling point to a stable unit buoyed by a slowdown in demand for greenbacks from importers. With no significant shifts expected, shilling will remain within the current levels,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.