The Uganda shilling marginally gained as it searched for a meaningful direction on either side of 3800 mark. The unit joined a global risk rally amid weakness in the US treasury yields and a dip in dollar value during the week. BOU defensive monetary policy signal also played in support of the shilling trend.
In the fixed income market, yields on the 3 and15 year bond continued on the upward, presenting a challenge as the related costs of government borrowing continue to rise .Local investors were seen demanding a higher premium as the fiscal situation stays in focus. Out of the 520 billion on offer, only 72.3 billion was realized.
In the global markets , the greenback was poised by a chorus of Fed statements as investors took their bets on the job data that was expected to keep the worlds biggest Central bank on an aggressive path to tame inflation.
In energy markets, OPEC announced that it will cut oil production by 2 million barrels a day. The cut will take effect in November. While oil prices had declined from their peak, the news sent the markets into a tail spin.
Outlook for the shilling indicate that the unit is likely to resume its long running slide as demand rebounds and oil prices start rising again.