Outlook for the shilling indicate range bound trading

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By Stephen Kaboyo

The Uganda shilling marginally weakened as demand from importers and the manufacturing sector picked up after a temporary interval of stability, where markets players were settling their mid-month tax obligations.
Trading was in the range of 3715/3725. In the interbank money market, overnight funds traded at 5% and one week funds at 9%.

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In the fixed income market, three and 15 year bonds were issued. Yields edged up with a 3- year trading at 11.862% and 15 year at 14.975% respectively. Bank of Uganda accepted 186 billion against the target of 120 billion in order to meet government financial shortfalls as the end of the fiscal year gets closer.

In the regional currency markets, the Kenya shilling inched up against the dollar on the back of improved inflows mainly from remittances from Kenyans living abroad. Trading was in the range 100.40/60.

In the international currency markets, the US dollar edged higher buoyed by a rise in US Treasury yields that suggest a more upbeat outlook for the world’s largest economy reinforcing markets expectation that the Federal Reserve would raise borrowing rates two more times this year.

Outlook for the shilling indicate range bound trading, with support firmly holding at 3725. Demand past the current levels will likely remain thin, thereby keeping the currency stable and confined within the range.

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