The currency continued to trade within a tight range between the 3790 – 3835 range during the week with balanced activity on the supply and demand side, Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda said.
She said the current range-bound trading within the Shs 3780 – Shs 3870 range is likely to hold in the short term until we see significant activity on either side.
Money Markets were liquid during the week with overnight yields trading within the nine percent to 10 percent levels. Bank of Uganda held a Shs 550 billion 5-year and 20-year Treasury Bond auction that was well subscribed and yields cleared at averages of 16.250 percent and 18.5 percent respectively. Bank of Uganda will hold a Shs 285 billion Treasury Bill auction on Wednesday 14th September 2022.
She said the narrative is the same for the Kenya shilling which continues to remain weak against the dollar with continued demand against limited inflows maintaining trading within the 120.00 -127.000 trading range. On Tuesday 13th September, William Ruto will be sworn in as the 5thPresident of the Republic of Kenya and he is determined to focus on unifying the country.
There was continued demand for dollars during Thursday’s trading session supported by lower jobless claims data and, a commitment by the Federal Reserve Bank to raise interest rates, to curb rampant inflation.
The Euro strengthened very briefly on Thursday as the European Central bank raised the benchmark rate by 75bps to 1.25 percent with signals of further hikes soon to tame inflation. The Euro closed the day at $0.9994 (Shs 3804).
The Pound weakened on Thursday after the passing of Britain’s longest-serving Monarchy having initially strengthened momentarily during the day on Prime Minister Liz Truss’ plan of action to cap energy bills for the next 2 years, to cushion the UK economy from the aftermath of the energy crisis. The pound touched lows of $1.1458 (Shs 4362) and ended the session at $1.1500 (Shs 4378).
Crude oil prices dropped on Thursday with the continued decline in global demand due to China’s lockdown and global recession fears as Central Banks continue to aggressively hike their benchmark rates. OPEC though still in talks to reduce production to mitigate sharp drops in oil prices. Brent crude traded at $91.48 (Shs 348,286) a barrel, West Texas Intermediate traded at $85.33 (324,871) indicating a seven-month low in oil prices. Gold traded at $1713 (Shs 6.5milion) an ounce.