Shilling re-coupes back losses as it closes the week trading stronger 

Having touched the week’s lows of 3625/3635, the shilling re-couped back the losses and closed the week trading stronger at 3605/3615.

 

Dollar inflows from remittance firms, commodity exporters and offshore investors outperformed existing corporate demand. The shilling is expected to trade within the 3575-3640 range in the near term.

 

Money markets were tight during the week with overnight yields trending within the 7.00-11.75 per cent range. The 182-day and 364-day tenors cleared flat 11.092 per cent and 12.002 per cent levels respectively during the week’s treasury bill auction while the 91-day edged higher to an average of 10.384 per cent from the previous auction yield of 9.310 per cent. Bank of Uganda picked Shs 270.56 billion of their targeted Shs 290 billion – less by Shs 19.44 billion.

 

Richard Nsubuga, a trader, CIB Markets at Absa Bank Uganda said the Kenyan shilling continued to lose ground against the dollar during the week. The currency closed the week trading at 142.90/143.10 per dollar, underpinned by persistent dollar demand from oil marketing companies and manufacturers. 

 

He noted that for the week ahead, the Kenyan shilling is expected to trade in the range of 142.90 – 145.00. The dollar index eased below 102.2 on Friday, after jobs data pointed to the US economy cooling.

 

Nonfarm payrolls expanded by 187,000 in July, less than market expectations of a 200,000 increase. However, the unemployment rate unexpectedly fell to 3.5 per cent. Relatedly, the yield on the US 10-year treasury note retreated almost to below 4.1 per cent on Friday as traders digested the payrolls report.

 

WTI crude futures rose toward $82 per barrel on Friday and were on track to advance for the sixth consecutive week, their longest streak of weekly gains this year, underpinned by Saudi Arabia and Russia’s announcement that they would extend voluntary supply cuts through next month.