The continued demand from Corporates that outweighed the supply side has kept the shilling on the backfoot trading at the 3880 or 3890 levels, just shy of the 3900 psychological level, Absa bank revealed.
Mid-month tax remittances are expected however if demand remains robust, then the unit is still likely to remain weak trading within the Shs 3860 to Shs 3930 trading range unless healthy flows filter into the market.
According to Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda global factors such as inflation rates, trade deficits, and political stability continue to support a strong dollar.
“Money Markets are still relatively tight with overnight yields trading between the 9.50 per cent to 10.75 percent levels. Bank of Uganda held a Shs 285 billion Treasury Bill auction on August 3rd, 2022 and the 91 day, 182-day and 364 day tenors cleared at averages of 8.774 percent, 10.250 percent and 13.503 percent. Bank of Uganda also held Shs 550 billion 2-year and 10-year Treasury Bond auction on Wednesday last week, yields cleared at averages of 14.000 Percent and 16.250 Percent respectively,” she said
In the run-up to the Kenyan elections, the Kenya shilling continued to depreciate to trade above the 119.00 level from Corporates who were purchasing for dividends on the back of limited dollar supply. The unit is anticipated to remain weak within the 119.00 to125.00 trading range.
“The dollar lost some ground during Thursday’s session as the market awaited the Non-Farm Payroll data, also on the back of recession woes. The Euro touched highs of $1.0253 (Shs 3910) on Thursday and closed the day at $1.0243 (Shs 3906) as the dollar lost some of its gains during the session.”
The Bank of England had its sixth consecutive rate hike of 50bps on Thursday as it attempts to curb inflation. The pound sterling ended the session at $1.2158 (Shs 4637) after it touched lows of $1.2065 (Shs 4601.74).
She said the Crude oil prices edged lower during the week due to a build-up of oil inventories in the US and a global economic slowdown with Brent Crude trading at $93.79 (Shs 357726) a barrel and West Texas Intermediate trading at $88.14 (Shs 336176) a barrel and $1784.77 (6807335) an ounce of gold.
