The local unit was relatively stable with a bit of interbank demand that emerged well managed by the available supply in the market as players squared off. Trading held in the range of 3525/35.
In the fixed income market, the record demand at the weekly sale of government securities indicate that the prevailing higher yields compared to other peer markets continue to downplay investor’s concerns about the country’s fiscal outlook. Market players placed orders far in excess of the offered amount and as a result yields slightly edged down to trade at 6.825%, 8.751% and 9.700% for 91,182 and 364 day respectively.
Regional Markets
In the regional currencies, the Kenya shilling weakened, undermined by significant demand mainly from energy and manufacturing sectors. The currency forecast point to volatility as end month demand kicks in, coupled with corporate dividend repatriation. The currency was quoted at 109.10/30.
In the global markets, the US dollar scaled a nine month high following the release of Federal Reserve minutes showing it was considering reducing pandemic era stimulus this year. Markets considered that revelation as positive for the dollar as it is expected to raise US government bond yields making it more attractive to hold dollar denominated assets.
Outlook for the shilling indicate stability with a slight bias towards strengthening. Support for the currency is expected to come from continued foreign buying of Uganda government securities. As investors re- assess their views on the economy, they are taking in the positives such as low inflation and stable exchange rate.