Uganda shilling weakened mid-week on the back of a surge in demand breaking a two week bullish spell.
Demand was mainly from energy and manufacturing sectors.
The unit traded in the range of 3550/60 compared to week’s opening levels of 3530/40.
In the fixed income markets, relatively higher interest rates in comparison to other peer markets continue to make Uganda government securities attractive. In the weekly auction demand at the short end of the curve surged with bid to cover ratios trending two times over. Yields remained flat at 7.003%, 9.501% and 10.700% respectively.
In the regional markets, the Kenya shilling faced headwinds due to high appetite for forex from corporate players with demand expected to persist against low supply flows. Trading held at 107:00/20.
In the global markets, the US dollar nursed losses against the major currencies as expectations that US interest rates will remain low.
During the trading week, investors priced in the view that any action remains a long way off and that the path might again be clear for a resumption of a downtrend as the US trade and account deficit weigh.
Outlook for the local currency indicate that the unit is likely to extend its slow decline on persistent dollar demand that is expected to drain the available market supply.
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