The Uganda shilling was on a losing streak, trading at its lowest in months plagued by the reality of inflation pressures and high oil import demand. The energy forex requirements dominated the market. The bearish engulfing pattern led the unit to touch 3700 level. In other regional markets the Kenya shilling and Tanzania shilling were largely stable but were expected to weaken on energy demand.
In the fixed income market the broader flattening bias is set to persist, signalling the imminent tightening cycle. Yields held at 6.501%, 7.98% and 9.000% for the short term government paper.
In the global markets, the US dollar continued to hold on its gains following the release of the minutes Federal Reserve MPC meeting that showed that another half a percentage point increase was likely at its next meeting in June. In the UK, the sterling fell sharply after the data showed subdued private sector activity while in the Eurozone, the common currency was boosted by the ECB signal of hiking rates in the coming months.
Forecast for the shilling indicate a sustained bearish trend.
In the absence of any major trigger, the market will largely be dependent on the global market performance more especially on outturn of energy demand that is the main influencer of the price action.
May 20 – May 27, 2022: Weekly financial markets review and outlook with Stephen Kaboyo
Stephen Kaboyo, Founder and Managing Director Alpha Capital Partners
