Uganda shilling notes

The shilling has maintained its upper hand against the dollar having opened at the 3760/3770 levels and touched highs of 3739/3746 comfortably breaching below the 3750 psychological level.

According to Catherine Kijjagulwe, the head of Trading at Absa Bank Uganda, Corporates were remitting mid-month taxes during the week and this impacted activity on the demand side. On the other hand, the market continued to receive healthy inflows from NGOs, commodity exporters and some offshore remittances that helped the shilling maintain its momentum.

“With taxes out of the way, we may see some demand creeping back into the market, however, as we draw close to the year-end, the market also anticipates continued healthy remittance flows though these may not be as significant as previous years due to the global economy. But, we should still see some pockets that may keep the unit within the 3700 – 3770 trading range in the short term,” she said.

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Money Markets were fairly liquid during the week with overnight yields ranging between 10 percent and 11.50 percent. Bank of Uganda today held a Shs285 billion Treasury Bill auction and a 5-year and 20-year Treasury Bond auction next week on Wednesday 30th November 2022.

The Kenya shilling is still weak, however, there was some reprieve for dollar buyers on when the Central Bank sold intending to support the Oil sector. There were also some NGO flows. Tax payments are expected during the coming week. There are still outstanding demand tickets in the market that continue to keep the unit within the 122.00 – 126.00 levels – a range that is likely to continue in the coming week.

The dollar shed some of its losses during Thursday’s session as jobless claims printed at 222k, marginally lower than the expectation of 225k and also a favourable rise in housing statistics.

The Euro also lost steam as the dollar strengthened on Thursday. The unit slipped to touch lows of $1.0303 and closed the session at $1.0367.

The Pound also followed suit as the UK Finance Minister announced restraint on public spending and increased taxes in the UK to curb inflation. It closed the session at $1.1867 (Shs 4,439) after touching lows of $1.1765 (Shs 4,400).

Crude oil prices edged lower on Thursday with a reduction in demand since China has not fully reopened yet and easing geopolitical tensions as reports from NATO confirm that the missile fired in Poland was not from Russia. West Texas Intermediate traded at $81.91 (Shs 306395) a barrel and Brent Crude traded at $89.81 (Shs 335946) a barrel.

Gold traded at $1763 (Shs6.5 million) an ounce.

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