The shilling traded at lows of 3723/3733 during Friday’s morning session having weakened from the week’s opening levels of 3665/3675. This was driven by robust Corporate demand as we head into the period when companies usually remit dividends.

Catherine Kijjagulwe, the Head of Trading at Absa Bank Uganda, said month-end flows from NGOs and other sectors were overshadowed by the robust activity on the demand side. The shilling is anticipated to remain under pressure in the coming days ifbdemand persists and it is likely to trade within the 3670 – 3780 trading range.

Money Markets continued to face tight liquidity conditions with some residual tax remittances at the start of the week. Overnight yields were still elevated within the 11.50%-12.50% range. Bank of Uganda held a Shs 550 billion 5-year and 20-year Treasury Bond auction that cleared at averages of 15.000% and 17.000% respectively. Bank of Uganda is scheduled to hold a Treasury Bill auction on Wednesday March 1, 2023.

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She said Kenya shilling remains on the backfoot against the dollar trading within the 126.00-133.50, dollar supply is still low while demand persists and Central Bank of Kenya is still concerned about how all the outstanding demand can be met especially from the oil sector.

“The dollar remained strong on Thursday amid undertones of further rate hikes by the Fed, strong economic data also continues to signify economic growth,” she said.  

 The Euro weakened to touch lows of $1.0575 during Thursday’s session and closed the session at $1.0595. The trend of the Euro economy is still uncertain with recent mixed data releases.

The Pound slid during Thursday’s session, closing at lows of $1.2013. Catherine Mann, a member of the Bank of England Monetary Policy Committee highlighted that there are still inflationary pressures and mentioned that it is not likely that there will be a shift to cutting rates in the near term.

Crude oil prices rose despite a build-up in US inventories on prospects of a pickup in demand in the coming weeks, there are also undertones that Russia may reduce its oil production and exports by 25% in March 2023. Brent Crude traded at $82.98 a barrel and West Texas Intermediate at $76.01 a barrel.

Gold traded at $1822.79 an ounce.

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