The shilling continued to slide during the week to trade at lows of 3770/3780 on Friday morning, having opened at the 3745/3755 levels on Monday. The demand side remained active throughout the week with buying activity from Corporates for usual operations coupled with planned dividends, interbank and some pockets of offshore demand.
Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda said supply side flows continued to trickle in from NGOs offshores and commodity exporters but were quickly taken up by the dollar buyers. Month-end inflows from NGOs and other sectors will come into the market as we draw close to the end of March 2023.
She said if demand remains robust, the next psychological level that the market is closely watching is the 3800 level. The unit is likely to buoy within the 3720-3820 trading range in the short term.
Money Markets were fairly liquid during the week with overnight yields trading between the 11.00% -12.00% trading levels. Bank of Uganda held a 3-year and 15-year Treasury Bond auction and yields cleared at averages of 14.00% and 17.00% respectively. Bank of Uganda is scheduled to hold a Shs 215 billion Treasury Bill auction on 29th March 2023. The Uganda Bureau of Statistics is scheduled to release the March 2023 inflation data on 31st March 2023.
“The Kenya shilling saw a bit of relief during the week as the President and new Central Bank Governor spoke of the return of an active interbank market creating some calmness among customers and market players with the hope that market spreads will become narrow in the near future, the unit traded within the 130.5-140.5 levels. The Central Bank of Kenya also published and shared the Kenyan Foreign Exchange Code of Conduct,” she said.
The Federal Reserve raised its benchmark rate by 0.25% on Wednesday, cautious about the US Banking crisis and also indicating that the rate hikes may be ending soon. The dollar was volatile during the week but strong on Thursday being further enhanced by a lower jobless claims print of 191k from an anticipated 197k.
The Euro weakened on Thursday to close the day at $1.0833 (Shs 4,089) due to a strong dollar.
The Pound was volatile on Thursday as the market reacted to the Bank of England’s 0.25% rate hike that put the benchmark rate at 4.25%. The Pound briefly traded at highs of $1.2341 (Shs 4,658) and closed the day on Thursday at $1.2285 (Shs 4,637).
Brent Crude traded at $75.63 (Shs 285,515) a barrel and West Texas Intermediate at $69.69 (Shs 263,090) a barrel, a slight recovery during the week. Oil prices are still relatively low in comparison to earlier in the year as the Fed hiked its benchmark rate again and US stockpiles and increased oil flows from Russia despite sanctions. There are still prospects of recovery of demand as the China economy picks up again.
Gold traded at $1990.61 (Shs 7.5 Million) an ounce.