The Uganda currency has continued to trade within a tight range between the 3,790 to 3,835 range during the week with balanced activity on the supply and demand side.
The current range-bound trading within the Shs 3,780 to Shs 3,870 range is likely to hold in the short term until we see significant activity on either side.
Money markets were liquid during the week with overnight yields trading within the nine per cent to 10 per cent levels. Bank of Uganda held an Shs 550 billion 5-year and 20-year treasury bond auction that was well subscribed and yields cleared at averages of 16.250 per cent and 18.5 per cent respectively. Bank of Uganda will hold an Shs 285 billion treasury bill auction on Wednesday September 14, 2022.
According to Catherine Kijjagulwe, head of trading at Absa Bank Uganda the narrative is the same for the Kenya shilling which continues to remain weak against the dollar with continued demand against limited inflows maintaining trading within the 120.00-127.000 trading range. On Tuesday, September 13, William Ruto will be sworn in as the 5th President of the Republic of Kenya and he is determined to focus on unifying the country.
“There was continued demand for dollars during Thursday’s trading session supported by lower jobless claims data and, a commitment by the Federal Reserve Bank to raise interest rates, to curb rampant inflation,” she said.
The Euro strengthened very briefly on Thursday as the European Central bank raised the benchmark rate by 75bps to 1.25 per cent with signals of further hikes soon to tame inflation. The Euro closed the day at $0.9994 (Shs 3,804).
The pound weakened on Thursday after the passing of Britain’s longest-serving monarchy having initially strengthened momentarily during the day on Prime Minister Liz Truss’ plan of action to cap energy bills for the next 2 years, to cushion the UK economy from the aftermath of the energy crisis. The pound touched lows of $1.1458 (Shs 4,362) and ended the session at $1.1500 (Shs 4,378).
Crude oil prices dropped on Thursday with the continued decline in global demand due to China’s lockdown and global recession fears as Central Banks continue to aggressively hike their benchmark rates. OPEC though still in talks to reduce production to mitigate sharp drops in oil prices. Brent crude traded at $91.48 (Shs 348,286) a barrel, West Texas Intermediate traded at $85.33 (324,871) indicating a seven-month low in oil prices. Gold traded at $1713 (Shs 6.5milion) an ounce.