Negative sentiments on the state of the economy to weigh in on the Shilling

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By Stephen Kaboyo

The Uganda Shilling was stable as the downtrend paused and the currency held at the key support level Ugx. 3700.

The Stability was expected to be short-lived as there was momentum gathering for another spike on back of import demand and higher levels of liquidity in the money market. Trading was in the range of Ugx. 3690/3700.

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The interbank money market was awash with liquidity and rates to dip. Overnight rates traded at a record low of 5% while one week trade 8.5%.

In the fixed income space, 175 billion was on offer in the Treasury bill auction. There was a marginal rise in yields with 91 day trading at 8.48%, 182 day came out at 9.02% and 364 day traded 9.68. The auction was oversubscribed.

In the regional markets, the Kenya was firm supported by significant flows mainly from agriculture sector. Trading was in the range 100.80/101.00

in the international currency markets, the US dollar edged up, but gains were moderate as concerns over geo political tensions of Syria escalated shifted away the focus from the US- China trade wars.

In the coming week, the shilling is likely to remain on the back foot pressured by low forex inflows amidst expected rebound in demand from importers.

Coupled with this, the negative sentiment relating to the debate among the policy makers on the state of the economy is also expected to weigh in on the currency.

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