Pick-up in corporate and offshore weakened Ugandan shilling

The pick-up in corporate demand and some offshore demand for US Dollar led to the weakening of the shilling this week.

The pick-up in corporate demand and some offshore demand for US Dollar led to the weakening of the shilling this week.

Ms Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda told Monitor that the shilling has remained range-bound this week, opening Monday at Shs3,585 per US dollar buying and Shs3,595 per US Dollar selling and touching lows of Shs3,610 per US Dollar buying and Shs3,620 selling during the week, but later it settled at Shs3,595 buying and Shs3,605 levels on Friday morning while selling.

“The resumption of corporate demand and some offshore demand after mid-month taxes led to the unit’s weakening mid-week, but month-end flows from NGOs and other sectors gave it some reprieve,” she said.

Adding: “Overall, as we draw close to the end of the month, flows should remain healthy, albeit with some continued pockets of corporate demand for dividends, which is likely to keep the unit range-bound within the 3,560-3,630 trading band in the coming days.”  

According to her money markets are fairly liquid during the week with overnight yields between 6.25 percent - 7 percent.

Bank of Uganda held a Shs 500 billion 5-year and 20-year Treasury bond and yields cleared at averages of 14.000 percent and 15.950 percent respectively. Bank of Uganda will hold a Shs220 billion Treasury bill auction on March 30, 2022.  

Beyond Uganda she said the Kenya shilling remained weak trading at 114.55 per US Dollar buying and 114.75 per US Dollar selling as demand picked up from the Oils, Fast Moving Consumer Goods sectors and dividend payments.

 “Looking ahead, the unit is likely to remain weak within the 114.50 -115.50 trading range,” she said.  

Ms Kijjagulwe said the dollar remained strong against most major currencies on the back of favourable economic data and prospects of interest hikes by the Fed.

“The Euro remained weak touching lows of $1.0972 on Thursday and closing the day at $1.0997.The Pound followed suit touching lows of $1.3188 and closed Thursday’s session at $1.3188,” she said.

In the commodity category, she said Crude oil prices continued to climb during the week with Brent Crude trading at $116.54 a barrel and West Texas Intermediate at $110.14 a barrel. Gold traded at $1955 on Friday.


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