September 17 – September 24, 2021: Weekly financial markets review and outlook with Stephen Kaboyo

The local currency marginally pulled back, largely driven by interbank market activity while demand from other sectors of the economy remained dull. Trading was in the range of 3520/30

In the regional currencies, South African rand, Kenyan shilling , Nigerian naira and Zambian kwacha were all in cautious trade as events in the global markets stoked risk aversion. Kenya shilling in particular was on the edge as demand picked up. Commercial banks quoted KES at 110.10/30

In the global markets, the US dollar held below a near one month high as investors focused on two key risks; a potential default by Chinese property giant Evergrande, the world’s largest real estate company and the expected pace of US monetary policy tightening. The decision of the US Fed will determine the direction of all emerging market currencies as tapering of its stimulus measures would likely prompt a flight to safety.

Outlook for the Uganda shilling, suggest that unit could slightly ease as interbank market activity continue to dominate the counters with focus on global tail risks, while domestic market forces remain subdued.