The local currency hit pockets of volatility in early trade but price action became less intense towards the end of week as demand subsided. Mid-month tax payments did little to support the unit. Trading was in the areas of 3700/3710.
In the fixed income space, trading was limited to the secondary market as there was no schedule primary market auction.
The regional markets saw the Kenya shilling maintain a stable stance, firming slightly and clinging on early week gains on matched demand and supply conditions. The unit quoted at 108.45/65.
Global markets
In the global markets, the US dollar inched higher while Wall Street slipped, as investors locked in recent gains amid rising concerns about the resurgence of Covid-19.
Markets also reacted to the downbeat comments from the US treasury, that a stimulus deal was unlikely before Nov 3 vote, this led to a profit taking drive.
In commodities markets , oil prices strengthened as OPEC and its allies were seen complying with a pact to cut oil supply even as concerns loomed that recovery in fuel demand will likely stall on account of soaring global Covid-19 infections. Brent crude traded at US$43.39 a barrel.
Outlook for the shilling indicate that the unit will retain a firm stance ahead of the Monetary Policy meeting, an event that will keep trading on the cautious side.
Overall, Bank of Uganda is likely to maintain a loose monetary policy stance as growth concerns are expected to dominate policy debates.
