Uganda Shilling Weakens on Interbank, Corporate demand

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BY CATHERINE KIJJAGULWE

The shilling opened the first trading day of the year at 3652/3662 as interbank demand and some pockets of Corporate demand saw it touch lows of 3680/3690 and eventually close at 3675/3685.

Overall, the outlook is for the shilling to likely remain relatively weak trading within the 3650 – 3750 levels in the short term as activity picks up on the demand counter in the new year after the end of year wave of dollar inflows.

The Money Markets were still relatively tight with overnight at an average of 7.00% and there is no government securities auction scheduled this week.

The Kenya shilling closed Monday’s session at 109.25/109.45 during a quiet day of trading in a market that is still well-bid. The expectation for the week is for the currency to trade within 109.15 – 109.50 during the week.

The Pound touched the 1.37 level during Monday’s session, the highest level in three years during the first trading session with the UK out of the European Union.

This was after Boris Johnson’s trade deal with the European Union was sealed on Christmas Eve. Crude oil prices remain mixed awaiting OPEC’s decision on Oil Production as Covid cases continue to rise amid a slow rollout of immunisation in the US and Europe.

WTI fell 22cts to trade $48.33 and Brent Crude rose 28cts to trade just above $52. Gold climbed during Monday’s session to touch $1900 an ounce.

The writer is the Head of Trading at Absa Bank Uganda.


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