By Stephen Kaboyo
The Uganda shilling was caught in crossfire of a strengthening dollar as the local market stayed long USD. Markets remained cautious as weekly losses for risky assets were exacerbated by sterling’s decline in what was a volatile week in the financial markets. The unit held in the range of 3880/90.
In fixed income market, yields continued to rise in line with uptick in headline inflation and on the back of currency depreciation. With tight fiscal conditions, government is expected to step up their borrowing efforts in the domestic market to fund a higher fiscal deficit. Short yields cleared at 10.999%,12.251% and 14.449%.
The major global currencies were extremely volatile seesawing with global risk appetite with the British sterling being the biggest loser. The sterling sank to its lowest level in four decades on concern over the UK fiscal policy.
The US dollar continued to reign supreme strengthening against almost every single G10 currency.
Going forward, market forecast play indicate the underlying global sentiment coupled with weak economic fundamentals remain unsupportive for the outlook for the shilling.
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