It was an overall quiet week with the shilling maintaining trading within a narrow range between the 3650 – 3685 levels, as Corporates remitted mid-month taxes and inflows were limited with continued pockets on the demand side as activity picks up in the market.
Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda said as we draw close to the end of the month, usual inflows from NGOs should start to trickle into the market but also continued demand tickets that are still likely to keep the unit within the 3640 – 3740 trading range.
Money Markets were still tight during the week impacted by tax remittances with overnight yields still elevated at averages of 12%. Bank of Uganda held a Treasury Bill auction on Wednesday and yields in the 91-day, 182-day and 364-day tenors cleared at averages of 10.384%, 10.512% and 12.302% respectively.
Bank of Uganda is scheduled to hold a 5-year and 20-year Treasury Bond auction on Wednesday February 22, 2023.
The Kenya shilling saw some remittance inflows and inflows from the tea sector that helped cover some of the demand in the Kenyan market. However, the unit continued to trade within the 126.00 -133.50 trading range – a range it is likely to maintain in the near term.
She said the dollar remained strong as economic data continued to boost it. Jobless claims contracted to 194k and positive Producer Price Index data also rose to 0.7% Month on Month, further cementing the notion that the Fed will continue its rate-hiking cycle.
The Euro weakened on Thursday as the dollar strengthened, closing trading at $1.0668.
“The Pound also faced pressure due to dollar strength. On Thursday, it had touched highs of $1.2074 intraday but later weakened to close at $1.1993,” she said.
Brent crude traded at $83.69 a barrel and West Texas Intermediate at $77.03 a barrel with the continued build-up in US Stocks as the market awaits a pickup in demand from China. Also, strong US economic data indicates that the Fed will continue its rate-tightening cycles in the short term.
Gold traded at $1821.73 an ounce.
