Shilling watch: Little change expected

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The local currency was range bound in a market characterized by minimal activity during the national budget week with markets keenly following new pronouncements that would define the direction of the unit going forward.

The shilling was quoted at 3730/40 on the bid and ask.

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The interbank shilling was awash with liquidity with overnight funds and one week rates dropping to their lowest at 3.6% and 4.5% respectively.

In other economic news the Minister of Finance unveiled the 45.5 trillion national budget for FY20/21 that outlined government economic priorities that left markets guessing on how the budget will be funded amid Covid-19 challenges.

In the fixed income market, a two and ten year bond were auctioned with total amount 285 billion on offer. Yields came out at 13.500% and 14.750%. The uptake was significant with bid to cover ratios of 1.806 and 2.222.

The trend in the regional currencies was mixed, with Kenya shilling coming under pressure to trade at 106.70/90, on elevated demand mainly from oil importers while the Tanzania shilling firmed, on improved business sentiment to trade at 2309/2319.

In the global markets, it was a brutal week for risk sensitive currencies, oil and Wall Street tumbling on growing concern that resurgence of Covid infections could stunt the pace of recovery in the major economies as they reopened from lockdowns. This coupled with the Federal Reserve painting a bleak picture on the worlds biggest economy sent markets in a tailspin.

Outlook for the shilling indicate, little change expected, with dollar appetite expected to be trimmed by mid month corporate tax payments.

Alpha Capital Forex Bureau: For competitive Forex Rates VISIT Plot 12 KAMPALA ROAD-CHAM TOWERS SUITE 43: call: 0414-580619, 0392-612648

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