The local unit opened the week trading at the 3670/3680 levels during Monday’s session as month-end inflows from NGOs and other sectors started to trickle into the market and ably cover the dollar demand requirements.
Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda said the shilling is anticipated to trade within the 3650 – 3730 trading range in the short term with continued healthy month-end flows.
Money Markets continued to face tight liquidity conditions with overnight yields trading within the 11.00% – 12.50% range. Bank of Uganda will hold a UGX 480 billion 2-years and 10-year Treasury bond auction on Wednesday 25th January 2023.
She said the Kenya shilling is still under pressure with the continued dollar scarcity, yet there are outstanding demand tickets that need to be covered – especially for the energy sector. The unit is anticipated to trade within the 124.20 -129.50 range during the week.
The dollar was soft on Monday with bouts of weakness and strength during the day due to continued recession threats and also a likely slowed pace of interest rate hikes by the Fed affecting the currency.
The Euro touched highs of $1.0926 (Shs 4015) on Monday and closed the day at $1.0868 as markets continue to predict that the European Central Bank will continue to aggressively hike interest rates.
The Pound touched highs of $1.2447 (Shs 4574.36) on Monday and closed at $1.2373 (Shs 4547.17). As the market awaits the Fed and Bank of England rate decisions in February 2023.
Crude oil prices recovered slightly on prospects of recovery of demand from China in the next few months, however, concerns about a looming recession in the US also continue to weigh in. Brent crude traded at $88.02 (Shs 323,479) a barrel and West Texas Intermediate traded at $81.68 (Shs 300,179) a barrel. Gold traded at $1939.29 (Shs 7,127,028) an ounce.