BOU to cut the policy rate for April 2020
Globally Central Banks have reacted en masse to prop up their economies in the face of the Covid-19.
BOU is expected to move alongside its peers and slash its policy rate; a bigger cut than usual is expected to send a much strong signal in light of the severe risks that the economy faces.
While a hawkish, warlike policy from the Central Bank, is necessary at this stage, it will not work independently. The government must move in tandem and consider other fiscal measures that will protect businesses and minimize the effects on the broader economy.
Mixed bag for UGX, KES, and USD
After a string of losses in the last couple of weeks, the local currency took a breather. The shilling stabilized, trading in a narrow range of 3785/3795. Demand remained subdued amid tight liquidity conditions.
Companies Rise or Fall on How Well They Renew Their LeadersAs part of its open market operations, the Bank of Uganda was in the market mopping up an undisclosed amount via a 7-day repurchase agreement and deposit auction.
In the regional currency markets, the Kenya shilling was on the back foot as inflows from tourism and remittances dried up. The Kenyan shilling was expected to remain under pressure in the coming weeks. Trading was in the range of 105.75/95.
In the global markets, the US dollar edged up towards a 2% weekly rise boosted by a surge in oil prices as investors sought safety amid worsening global economic fallout. With the Covid-19 worsening in the US, weekly jobless claims doubled in a pace of a week to hit 6.6 million, a number never seen in the US labor market.
Forecast for the shilling indicates, a bit of stabilization, that is likely to be short-lived, given that general market conditions and macro backdrop remain shaky. On the broader outlook, pessimism will keep the dollar firmer against all world currencies for some time to come.
