By Stephen Kaboyo
The Uganda shilling was on the back foot trading at a six week low of 3715/25. The unit dropped 0.54% to trade above the 3700 level on 10th January. The mid-week currency weakness was driven by elevated demand across all sectors against limited supply.
In the regional markets, the Kenya shilling was equally under pressure, dropping to all time low of 126.8 on sustained demand mainsails from oil importers.
In the fixed income market, the 5 and 20 year bond auction with a total offer of 550 billion was held and yields held at 15.000% and 17.000% respectively. Market expectations indicate that the government’s approach to funding the 50 trillion budget for FY 23/24 will likely cause upward pressure on bond yields.
In the global markets, the US dollar held a bullish stance as investors braced for higher US interest rates as the Federal Reserve was seen not holding back on its tight monetary policy path. In energy and equity markets, oil and global markets rebounded on earlier losses as economic data showed a resilient US economy.
Shilling forecast indicate the unit will continue to trade in an already established bearish channel on the charts, and this is likely to be the turning point for a weaker Uganda shilling in the coming days.
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