The Uganda shilling tumbled further, undermined by a surge in demand from offshore investors on a race for liquidity as international sentiment triggered flight to safety. Trading was in the range of 3550/60.
In the fixed income market, yields in short term government securities remained unchanged with markets taking a view that yields have bottomed out following a consistent correlation of current 91 day benchmark rate to the Central bank policy rate. Yields printed at 6.501%,8.401%, and 9.700% respectively.
In regional markets, the Kenyan, Zambian , Nigerian and Tanzanian currencies were all facing fresh pressure on account of costly imports and debt service distress triggered by the geo political risk.
Globally, with the Ukraine crisis flaring up, volatility was strong in all major currencies with US dollar the only unit on the front foot supported by international safe haven sentiment coupled with the Federal Reserve comments of rising interest rates at its March meeting. The Euro was set for its worst performance as the prospect of high commodity prices continued to be a concern for European economies.
In energy markets, oil prices soared as the Ukraine crisis triggered a dash for commodities that could be in short supply. A barrel traded at USD 110.
Going forward, the UGX technical outlook is likely to slump into a new support level due to a combination of current market positioning and the negative sentiment that will yield a strong bearish trading bias.
February 25 – March 4, 2022: Weekly financial markets review and outlook with Stephen Kaboyo
Stephen Kaboyo, Founder and Managing Director Alpha Capital Partners
