The Uganda shilling showed its volatile side in the recent days having endured a torrid time last week crossing a key level of 3650 [compared to last week’s close of 3,610/3,620] against a resurgent dollar.
This week however the local unit looked to regain some of its losses in line with emerging market movements.
Regionally, the Kenya shilling is expected to weaken on high demand against thin supply in the market, while the currencies of Zambia, Tanzania and South Africa are expected to remain broadly stable underpinned by adequate market flows.
Globally , the US dollar was heading to a second consecutive week of decline as sentiment stayed tilted towards high beta currencies, with markets trying to assess whether the dollar has scope to fall further or it is a temporary blip.
In the energy markets, oil tumbled to $83per barrel as forecast for a mild US winter put the brakes on the rally that drove prices to a 3 year high above $86.
Going forward, the shilling is likely to trade in a tight band, with a bias towards a slight appreciation, supported by conversions by foreign investors participating in the MTN IPO.
MTN Uganda, a unit of South Africa’s MTN Group is currently conducting an IPO in which it is selling 20% of its equity to the public.
The writer works with Alpha Capital Forex Bureau: For competitive Forex Rates VISIT Plot 12 KAMPALA ROAD-CHAM TOWERS SUITE 43: call: 0414-580619, 0392-612648