By Stephen Kaboyo
The Uganda shilling was wobbly at the end of the trading week undermined by elevated demand mainly from interbank as banks covered positions.
Trading was in the range of 3685/3695. In the shilling money market, overnight funds quoted at 6% while one week held at 9%.
In the fixed income market segment, a Treasury bill auction with 225 billion on offer was held. Yields remained generally flat, capping at 9.68%,11.41% and 13.953%.
An under subscription was registered at the six month curve.
In the regional markets, the Kenya shilling firmed supported by inflows from commodities, remittances and offshore investors buying stocks amid thin demand. KES was quoted at 100.95/101.15 at close of the week.
In global markets the US dollar was bullish after multiple data releases painted a positive economic picture reversing earlier weaknesses following the preliminary deal between US and China to de- escalate trade wars.
Among the economic reports, US retail sales increased for a third straight month while a gauge of manufacturing activity rebounded to its highest level in eight months.
Forecast for the shilling indicate a stable unit, deriving much of its support from expected flows commodities.
The upcoming Chinese New Year holidays will also likely have an impact on market activity going forward. the impact of Chinese New Year spreads far beyond mainland China
Also known as Lunar New Year, or the Spring Festival, the event sees Chinese people from around the world hold big family reunions, travel abroad, and give substantial gifts to those close to them.
Chinese New Year sparks the most gargantuan mass migration of people each year, as the vast majority of the country’s 1.4 billion strong population return home to reunite with their families.
While the public holiday is officially only seven days long, and the festival formally culminates on day 15, with an event known as the Lantern Festival, most Chinese take the majority (if not all) of their annual holiday over this time, meaning people can be off work from two weeks before the start of the event, and return weeks after it has ended.
This means the country, and practically all of its industries, can shut down for three, possibly even four weeks overall. During this period their no imports and demand for Foreign exchange reduces considerably.
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