The Uganda shilling backtracked slightly, surrendering previous week’s gains as some pockets of demand emerged. The impact of the new covid-19 measures kept the markets on the edge. Trading was in the range of ugx. 3520/30.
In a related development, Bank of Uganda kept support for economic recovery by dropping the policy rate to a record low of 6.5%, citing uncertain times ahead.
In government securities markets, short term yields continued on the down trend underpinned by huge appetite for Uganda government risk.
Domestic banks and offshore portfolio investors were very active driving rates to record lows of 6.849%, 9.000% and 9.950% for 91, 182 and 364 day respectively.
In the regional markets, the Kenya shilling gained slightly, underpinned by positive sentiment generated by the expected Eurobond sale and the World Bank loan disbursement.
The unit was quoted at 107.70/90.
In the global markets, the US dollar jumped against a basket of currencies after the Federal Reserve brought forward its projections for the first post pandemic interest rate hikes into 2023 indicating an improved health situation, watering down the long held reference that pandemic was weighing on the economy.
Outlook of the shilling indicate mild volatility as the country contends with surging Covid-19 infections and the likelihood for more aggressive measures to contain the pandemic.
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