Uganda shillings claws back its losses, stands tall

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By Stephen Kaboyo

In the first full trading week for the year, the shilling went through volatility swings, opening weak at levels of 3700/3710 as markets players repositioned and the close of the week, the unit had clawed back its losses and was standing tall trading at 3660/3670.



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In the interbank shilling market rates were steady holding out at 6% for overnight funds and 9% for one week respectively.

In the fixed income market, there was no primary auction. Scanty trading was reported in the secondary market.



In the regional markets, the Kenya shilling traded in a similar trend, weakening at the beginning of week, undermined by Importer demand but mid-week stabilized, supported by remittance flows. Trading was in the range of 101.25/45.

In the global markets, the US dollar looked set to post its best week in two months, buoyed by easing Middle East tensions as US and Iran seem to have backed away from further confrontation. Upbeat economic date also helped to uplift sentiment.



Meanwhile in the US fixed income markets, yields on government bonds edged up. Higher yields were likely to support the dollar further by attracting capital flows.



Outlook for the shilling indicate a strong unit as mid-month corporate tax payments more especially at the beginning of the year tend to be larger than usual and thereby affecting market demand.



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