The shilling opened the month and week trading at the 3730/3740 levels, weakened briefly to lows of 3745/3755 but later gained ground to open Friday’s session at the 3715/3725 levels helped by healthy flows from NGOs, commodity exporters, interbank and other sectors that outweighed the limited demand pockets during the week.
The unit is anticipated to trade within the 3680 – 3780 trading range in the coming days with a possible pick-up in activity in the market.
Money Markets were liquid throughout the week with overnight yields trading between 10.00% -11.50%. Bank of Uganda mopped the excess liquidity through Repos and the BOU Bills. There was no scheduled government securities auction during the week. Bank of Uganda will hold a Shs185 billion on Wednesday May 10, 2023.
The Kenya shilling is still weak overall with the Central Bank selling some dollars during the week but overall still some residual dollar requirement in the market keeping the unit on the Blackfoot. Interbank activity is picking up slowly. The unit still likely to trade within the 136.00 -138.00 levels in the near term.
The dollar gained some ground during Thursday’s session with some dollar demand seen during the session after the Federal reserve hiked its benchmark rate by 0.25% to 5.00%- 5.25%. The market is closely digesting and keen to see the next action by the Federal Reserve in the coming months.
The European Central Bank also hiked its benchmark rate by 0.25% to 3.75% with continued high inflation in the Eurozone. The Euro closed Thursday’s session at lows of $1.1011.
The market awaits the Bank of England policy stance next week anticipating a 0.25% rate hike. The pound touched highs of $1.2598 on Thursday and closed the day at $1.2572.
Brent Crude traded at $73.42 a barrel and West Texas Intermediate at $69.41 a barrel. Oil prices traded lower than previous weeks as concerns about a lingering recession and impact on demand, continued rise in interest rates and the overhanging concerns about banks.