Market watch: Shilling seen trading in a broadly stable range as demand remains sluggish

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The Uganda shilling opened the week firm, but surrendered some ground on uptick of corporate and interbank demand. The surge was seen as intermittent and was likely not to hold for long. Trading was in the range of 3660/70 on both counters.

In the fixed income market, yields on government treasuries remained flat but tracking the trend in the last quarter, yields have been on the decline, but still hugely attractive given the near term outlook for inflation that remains low, implying attractive real yields for investors seeking a good return.

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The benchmark 91 day rate held at 6.999%.

In the regional markets, the Kenya shilling was unchanged but was forecast to weaken due to end month demand. Trading was in the range of 109.75/95.

In the global markets, the US dollar edged down from a four month high as better than expected purchasing managers surveys in Britain and Europe offset concerns over third Covid wave in Europe, potential US tax hikes and rising tensions between the West and China, which collectively sapped risk appetite.

In the coming days the shilling is seen trading in a broadly stable range as demand remains lethargic, with very slow up take of forex in all market segments.

the writer works with Alpha Capital Forex Bureau: For competitive Forex Rates VISIT Plot 12 KAMPALA ROAD-CHAM TOWERS SUITE 43: call: 0414-580619, 0392-612648

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