By Stephen Kaboyo
The Uganda shilling traded flat against the dollar on muted demand. The shilling was on one hand supported by end month flows from charities and coffee export flows coupled by Bank of Uganda liquidity mop up operations that took out 839 billion equivalent to $222 million.
In the interbank shilling market overnight funds traded at an average 5.1% while one week funds traded at 6%.
In the regional currency markets, the Kenya shilling was on the ropes, undermined by elevated end month demand from manufacturers and importers Market players were also seen building positions ahead of expected dividend payments.
Trading was in the range of 107.10/30
The South African rand climbed to its highest level in nearly 9 weeks, riding on positive sentiment boosted by optimism as economies opened up from lockdown. SAR traded at 17.3100 per dollar.
The US dollar fell to a near two month low as global risk appetite improved on account of major economies gradually easing COVID restrictions. In Britain, the pound rose half a percent against the dollar, while in the Eurozone, the common currency stood tall, gaining support from the announced 750 billion euro COVID recovery fund that gave European markets a sense of optimism.
The shilling is expected to hold steady, with its price action largely driven by risk sentiment, which is leading markets to favor riskier assets. Another critical market factor to watch in the next couple of weeks is the direction of market players towards taking positions ahead of the “COVID “budget presentation for FY 20/21.
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