Uganda shilling notes

The shilling opened the week on a relatively strong footing at the 3735 / 3745 levels and has maintained trading within the 3730 – 3750 trading range throughout the week with continued healthy flows from NGOs, remittance flows that comfortably matched the demand pockets that were seen during the week.

As businesses start to slowly slow down and head into the festivities, the Market still anticipates healthy flows that are likely to keep the unit within the 3700-3780 trading range in the short term until real demand picks up again after the festivities.

Money Markets were fairly liquid during the week with overnight yields trading within the 9.50% – 11.50%. Bank of Uganda held a Shs550 billion 5-year and 20-year Treasury Bond auction on Wednesday and yields cleared at averages of 16.250% and 17.000%  respectively. Bank of Uganda is scheduled to hold a Treasury Bill auction on Wednesday 7th December 2022.

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Continued demand for dollars kept the Kenya shilling weak trading within the 122.00-126.00. The Central Bank did not intervene on the sell side but continues to urge market players to support the Oil sector. The Kenya shilling is still likely to remain weak within the 122.00 – 126.00 trading levels. 

The dollar was marginally weak on Thursday affected by a couple of economic releases like the October consumer spending inflation that was at 0.8% and jobless claims data printed at 225k from an expectation of 235k. These further continue to tally with the Federal Reserve’s anticipated slow pace of rate hikes in the coming months.

The Euro was strong on Thursday riding on a relatively weak dollar touching highs of $1.0533 (Shs 3917) and closing the day at $1.0522 (Shs 3913).

The Pound followed suit and also strengthened to trade above $1.2300 (Shs 4574) and later closed the day at $1.2253 (Shs 4556).

Crude oil prices continued to trade below $90 a barrel during the week as the Market continues to hope for the easing of Covid lockdown measures in China that will help bolster demand in the coming months. Brent Crude traded at $86.90 (Shs 323173) a barrel and West Texas Intermediate at $81.03 (Shs 301343) a barrel.

Gold traded at $1802 (6.7million) an ounce.

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