The Uganda Shilling held steady with supply side showing strong response against tepid demand. Trading was in the range of 3665/75. In other UGX peer currencies, the trend was similar following comments by the US Fed Chairman that the US economy needed support for some time creating negative sentiment and hurting the dollar.
In the fixed income markets, yields on the short term government paper slightly dropped in an auction that was highly oversubscribed with bid to cover ratio on the 91 day almost 3 times the offer, 1.905 and 1.545 for 182 and 364 day respectively. Huge demand continue to be a reflection of scarcity of high yielding alternative investments in both the domestic and global markets.
Globally, the safe haven US dollar slumped against other major currencies while world stocks hit a record high after the Federal Reserve took a swipe at the rising yields by indicating that the US rates are likely to remain low for years to come.
Forecast for the shilling indicate a range bound unit with a slight appreciation bias that is anchored on end month flows that will improve the supply side.
February 19 – February 26, 2021: Weekly financial markets review and outlook with Stephen Kaboyo
Stephen Kaboyo, Founder and Managing Director Alpha Capital Partners
